ReneSola Provides Business Update and Announces Second Quarter 2017 Results
SHANGHAI, Sept. 27, 2017 /PRNewswire/ -- ReneSola Ltd ("ReneSola" or the "Company") (www.renesola.com) (NYSE: SOL), a leading fully-integrated solar project developer and provider of energy efficient products, today provides a business update and announces its unaudited second quarter 2017 results.
As announced on September 25, the Company has entered into a definitive share repurchase and subscription agreement (the "SPA") with Mr. Xianshou Li, the Company's Chairman and Chief Executive Officer (the "Buyer") for the sale of the Company's manufacturing (including polysilicon, solar wafer, solar cell and solar module manufacturing) and LED distribution businesses (the "Acquired Businesses"). The transaction will also transfer substantially all of ReneSola's related indebtedness to Li. The transaction will result in:
i) The Company will no longer be liable for the bank borrowings in excess of RMB 3 billion, and the Buyer and his spouse will continue to provide personal guarantees for a majority of such bank's borrowings;
ii) The acquired businesses will cancel approximately $217.3 million of intercompany payables owed to it by the Company; and
iii) The Company will issue 180 million ordinary shares to ReneSola Singapore Pte. Ltd., an entity to be fully owned by the Buyer upon completion.
Mr. Li commented, "This transaction completes the strategic transformation that was initiated in 2015. We will exit the manufacturing business, which has been impaired by overcapacity, pricing pressure and low profitability, and will become a pure play in the rapidly growing and profitable project development market. We believe this is the best path forward for ReneSola. The losses and a weakened balance sheet of the manufacturing business have been significant constraints on the growth of our downstream business. I am very excited to see ReneSola start anew with a stronger balance sheet, a highly capable team and significant growth opportunities. This transaction represents the beginning of a new chapter for ReneSola."
This transaction will significantly improve the Company's balance sheet, providing the financial flexibility necessary to drive the growth of the Company's project development business. The table below summarizes the pro forma changes in the Company's balance sheet, based on the terms of the transaction when it is completed.
All amounts, other than Post- Transaction Pre-Transaction
percentages, are in millions
of US$ June 30, 2017 June 30, 2017
------ ------------- -------------
Total Asset 250.0 1,154.9
Total Liabilities 169.5 1,140.2
----Bank Borrowings 33.5 701.7
Total Equity 80.5 14.7
Debt-Asset Ratio 67.8% 98.7%
---------------- ---- ----
The table below outlines the key benefits that ReneSola expects to derive from this transaction.
Key Benefits Details
------------ -------
Low Leverage Eliminate over RMB 3 billion of bank debt
Debt-asset ratio of 68% down from 98.7% as of
June 30, 2017
Lower Management & Financial Costs Management costs are expected to drop from $46
million to $12 million per year
Financial costs to further decrease
Enhanced Financing Ability for Projects Lower corporate leverage improves project
bankability
Healthy balance sheet enables the Company to
lower financing cost and achieve attractive IRR
for projects
Restore Investor Confidence Operate growing project business with proven
track record
Spin-off indebted manufacturing business
Solid global project pipeline to ensure future
growth
Strategic Success Completes multi-year transition to downstream
business
--- --------
Project Development Strategy
Since entering the project development business, ReneSola has developed over 480 MW of projects around the world. These projects range from utility scale to smaller rooftop distributed generation. They share the common traits of operating in stable, mature markets with attractive subsidies. The Company believes that its strong track record in solar project development will enable it to accelerate the development of its project pipeline, as well as attract project financing on favorable terms.
While Build-Transfer continues to be an important strategy for the foreseeable future, ReneSola also intends to retain more projects in selected regions and become an independent power producer ("IPP"). The IPP model is especially attractive, due to the resulting high margin recurring revenue. Over time, the Company intends to shift a meaningful amount of its revenue to recurring power sales.
The Company believes the China rooftop solar market is an especially lucrative opportunity and has aggressively established its presence in that market. Rooftop projects can provide steady cash flow, double-digit IRRs, and reduced risk of curtailment or subsidy delays. ReneSola currently owns over 130 MW of rooftop projects under development, concentrated in a handful of eastern provinces of China with attractive development environments. The Company anticipates to own 150 MW of China's rooftop projects by the end of 2017.
Operating Assets Capacity (MW)
China DG 131.2
-Zhejiang 33.3
-Anhui 28.8
-Henan 57.9
-Jiangsu 5.7
-Shandong 5.5
Romania 15.4
------- ----
Mr. Li further commented, "We have demonstrated our ability to successfully build and transfer solar power projects globally. Our project development team consists of 314 dedicated employees around the world. Our strong and capable team, extensive financing relationships and track record of success give us high confidence that we can profitably grow the 'new' ReneSola."
The following table sets forth the Company's late-stage project pipeline by location:
Project Location Shovel-ready (MW)
---------------- ----------------
USA 151.8
--- -----
UK 4.3
--- ---
Japan 17.5
----- ----
Canada 8.6
------ ---
Turkey 133.0[1]
------ -------
France 0.3
------ ---
Poland 55.0
------ ----
Thailand 5.0
-------- ---
China DG 104.5
-------- -----
Total 480.0
----- -----
[1] With the start of
operation, ReneSola holds
50% of the economics in the
projects, which are held
for sale and expected to be
sold in the normal course
upon connection or shortly
thereafter.
As of September 10, 2017, the Company had a pipeline of over 1 GW of projects in various stages, of which 480 MW are projects that are "shovel-ready". The shovel-ready projects include (i) oversea projects that ReneSola has the right to develop or has self-originated in that ReneSola has obtained definitive agreement, and (ii) projects in China that are either owned by ReneSola and have been filed with PRC National Development and Reform Commission, or third-party projects to which the Company has signed definitive agreements for EPC services. The Company has identified a number of opportunities in China's domestic distributed generation market, and had 104.5 MW of such projects in the shovel-ready stage as of September 10, 2017.
Outlook
For the third quarter of 2017, the Company's project business is expected to generate revenue in the range of $40 to $45 million and overall gross margin in the range of 15% to 20% with the gross margin of IPP business in the range of 65%-70%. The Company expects to connect 20 to 30 MW of projects during the third quarter of 2017.
Second Quarter 2017 Financial Results
The Company today also announced its unaudited financial results for the second quarter of 2017. Because the majority of revenue and losses are related to the Acquired Businesses being sold, the consolidated results are not indicative of the Company's future financial outlook. As such, the Company is only presenting a brief summary for informational purposes.
Second quarter revenue of $151.6 million was down 3.2% sequentially and down 39.4% year-over-year. Net loss was $31.5 million, compared to net loss of $23.2 million in Q1 2017 and net income of $5.5 million in Q2 2016.
The Company recognized revenue of $3.1 million from the sale of rooftop projects of 3.0 MW in China's domestic distributed generation market in Q2 2017. The Company also signed an agreement to sell a utility-scale project located in North Carolina with a capacity of approximately 6.75 MW with revenue expected to be recognized in Q3 2017. Subsequent to the end of the quarter, the Company signed additional agreements to sell projects overseas, including (i) two ground-mount projects in the United Kingdom with a combined capacity of approximately 10 MW; and (ii) a portfolio of ground-mount projects in North Carolina with an aggregate capacity of 24 MW. These projects are expected to be connected to the grid by December 2017.
Conference Call Information
ReneSola's management will host an earnings conference call on September 27, 2017 at 8:30 a.m. U.S. Eastern Time (8:30 p.m. China Time).
Dial-in details for the earnings conference call are as follows:
Phone Number Toll-Free Number
------------ ----------------
United States +1 8456750437 +1 8665194004
------------- ------------- -------------
Hong Kong +852 30186771 +852 800906601
--------- ------------- --------------
Mainland China +86 8008190121
+86 4006208038
--- --------------
Other International +65 67135090
------------------- ------------
Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is 77739816.
A replay of the conference call may be accessed by phone at the following numbers until October 5, 2017. To access the replay, please again reference the conference passcode 77739816.
Phone Number Toll-Free Number
------------ ----------------
United States +1 6462543697 +1 8554525696
------------- ------------- -------------
Hong Kong +852 30512780 +852 800963117
--------- ------------- --------------
Mainland China +86 8008700206
+86 4006322162
--- --------------
Other International +61 281990299
------------------- -------------
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.
About ReneSola
Founded in 2005, and listed on the New York Stock Exchange in 2008, ReneSola (NYSE: SOL) is an international leading brand of solar project developer and technology provider of energy efficient products. Leveraging its global presence, expansive distribution and sales network, ReneSola is well positioned to develop green energy projects with attractive return and provide its highest quality green energy products around the world. For more information, please visit www.renesola.com.
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.
For investor and media inquiries, please contact:
In China:
ReneSola Ltd
Ms. Rebecca Shen
+86 (21) 6280-9180 x106
ir@renesola.com
The Blueshirt Group Asia
Mr. Gary Dvorchak, CFA
+86 (138) 1079-1480
gary@blueshirtgroup.com
In the United States:
The Blueshirt Group
Mr. Ralph Fong
+1 (415) 489-2195
ralph@blueshirtgroup.com
RENESOLA LTD
Unaudited Consolidated Balance Sheets
(US dollars in thousands)
Jun 30, Mar 31, Jun 30,
2017 2017 2016
ASSETS
Current assets:
Cash and cash equivalents 28,633 26,634 23,723
Restricted cash 110,661 117,783 139,645
Accounts receivable, net of allowances for doubtful 112,185 108,230 185,573
accounts
Inventories 92,291 153,220 165,470
Advances to suppliers-current 15,891 15,727 23,286
Amounts due from related parties 12,553 9,385 77
Value added tax recoverable 8,084 10,956 5,911
Prepaid income tax 1,142 1,115 4,338
Prepaid expenses and other current assets 20,723 16,002 18,288
Project assets 116,869 75,574 64,756
Deferred convertible notes issue costs-current
Derivative assets 124 - 2,077
Assets held-for-sale - 8,540 -
Deferred tax assets-current, net - - -
Total current assets 519,156 543,166 633,144
Property, plant and equipment, net 537,595 486,278 568,090
Prepaid land use right, net 32,204 31,923 35,842
Deferred tax assets-non-current, net 16,766 19,168 14,403
Advances for purchases of property, plant and 3,554 1,824 285
equipment
Deferred project costs 20,913 19,153 17,576
Project assets-noncurrent 4,537 6,103 9,463
Other long-lived assets 20,201 18,706 9,943
Total assets 1,154,926 1,126,321 1,288,746
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Convertible bond payable-current
Short-term borrowings 671,432 647,587 716,512
Accounts payable 203,185 221,580 280,609
Advances from customers-current 83,954 36,701 20,342
Amounts due to related parties 5,076 4,575 2,831
Other current liabilities 61,473 59,655 66,536
Income tax payable 318 302 128
Derivative liabilities 371
- -
Warrant liability 26
- -
Total current liabilities 1,025,438 970,771 1,086,984
Convertible notes payable-non-current
Long-term borrowings 30,328 31,057
-
Deferred revenue 33,305 32,566 28,366
Warranty 28,704 28,114 38,870
Deferred subsidies and other 21,267 20,943 22,203
Other long-term liabilities 1,139 939 15
Total liabilities 1,140,181 1,084,390 1,176,438
--------- --------- ---------
Shareholders' equity
Common shares 476,658 476,658 477,171
Additional paid-in capital 8,569 8,420 7,994
Accumulated loss (524,665) (493,215) (424,020)
Accumulated other comprehensive income 53,385 50,068 51,163
Total equity attribute to ReneSola Ltd 13,947 41,931 112,308
Noncontrolling interest 798 -
-
Total shareholders' equity 14,745 41,931 112,308
------ ------ -------
Total liabilities and shareholders' equity 1,154,926 1,126,321 1,288,746
========= ========= =========
RENESOLA LTD
Unaudited Consolidated Statements of Income
(US dollar in thousands, except ADS and share data)
Three Months Ended Six Months Ended
------------------ ----------------
Jun 30, 2017 Mar 31, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016
Net revenues from third parties 151,632 148,267 250,038 299,899 510,734
Net revenues from related parties - 8,343 - 8,343 0
Total net revenues 151,632 156,610 250,038 308,242 510,734
Cost of revenues (147,509) (154,889) (208,886) (302,398) (425,077)
Gross profit 4,123 1,721 41,152 5,844 85,657
----- ----- ------ ----- ------
GP% 2.72% 1.10% 16.50% 1.9% 16.8%
Operating (expenses) income:
Sales and marketing (11,753) (3,776) (15,152) (15,529) (28,652)
General and administrative (12,649) (12,450) (13,525) (25,099) (26,794)
Research and development (5,352) (5,707) (7,424) (11,059) (15,614)
Other operating income 5,250 2,458 1,324 7,708 4,018
Total operating expenses (24,504) (19,475) (34,777) (43,979) (67,042)
------- ------- ------- ------- -------
Income (loss) from operations (20,381) (17,754) 6,375 (38,135) 18,615
------- ------- ----- ------- ------
-13.40% -6.30% 2.50% -12.37% 3.64%
Non-operating (expenses) income:
Interest income 378 312 715 690 1,492
Interest expense (8,571) (9,248) (8,477) (17,819) (18,337)
Foreign exchange gains (losses) (78) 161 4,336 83 7,281
Gains (losses) on derivatives, net (411) (332) 2,869 (743) 2,267
Investment gain on disposal of subsidiaries - - - 0 7
Gains on repurchase of convertible bonds - - - 0 213
Fair value change of warrant liability - - 131 0 551
Income (loss) before income tax, (29,063) (26,861) 5,949 (55,924) 12,089
noncontrolling interests
Income tax (expense) benefit (2,396) 3,621 (425) 1,225 (832)
Net income (loss) (31,459) (23,240) 5,524 (54,699) 11,257
------- ------- ----- ------- ------
Less: Net income (loss) attributed to (9) 0 0 (9) 0
noncontrolling interests
Net income (loss) attributed to (31,450) (23,240) 5,524 (54,690) 11,257
holders of ordinary shares
Earnings per share
Basic (0.16) (0.12) 0.03 (0.27) 0.06
Diluted (0.16) (0.12) 0.03 (0.27) 0.06
Earnings per ADS
Basic (1.57) (1.16) 0.27 (2.73) 0.56
Diluted (1.57) (1.16) 0.27 (2.73) 0.56
Weighted average number of shares used in computing loss per share
Basic 200,538,902 200,538,902 201,998,340 200,538,902 202,580,825
Diluted 200,538,902 200,538,902 201,998,340 200,538,902 202,580,825
RENESOLA LTD
Unaudited Consolidated Statements of Comprehensive Income (loss)
(US dollar in thousands)
Three Months Ended Six Months Ended
------------------ ----------------
Jun 30, 2017 Mar 31, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016
Net income (loss) (31,459) (23,240) 5,524 (54,699) 11,257
Other comprehensive income (loss)
Foreign exchange translation adjustment 3,317 (1,165) (7,921) 2,152 (10,414)
----- ----- -------
Other comprehensive income (loss) 3,317 (1,165) (7,921) 2,152 (10,414)
----- ------ ------ ----- -------
Comprehensive income (loss) (28,142) (24,405) (2,397) (52,547) 843
Less:comprehensive loss attributable to non-controlling interest (9) - - (9) 0
--- --- ---
Comprehensive income (loss) attributable to ReneSola (28,133) (24,405) (2,397) (52,538) 843
======= ======= ====== ======= ===
RENESOLA LTD
Unaudited Consolidated Statements of Cash Flow
(US dollar in thousands)
Six Months Ended
----------------
Jun 30, 2017 Jun 30, 2016
Operating activities:
Net profit/(loss) (54,690) 11,257
Adjustment to reconcile net loss to net cash provided by (used in) operating activity:
Inventory write-down 4,032 -
Depreciation and amortization 38,766 39,275
Amortization of deferred
convertible bond issuances
costs and premium 33
-
Allowance of doubtful
receivables, advance to
suppliers and prepayment for 1,570 131
purchases of property, plant
and equipment
Gain (loss) on derivatives 743 (2,088)
Fair value change of warrant
liability (551)
-
Gain from settlement of
certain payables
Gain from advances from
customers
Share-based compensation 339 512
Gain (loss) on disposal of
long-lived assets (3,087) 5,358
Gain on disposal of solar
project (2,527)
-
Impairment of goodwill
Impairment of Intangible
assets
Impairment of long-lived
assets
Reversal of firm purchase
commitment
Gain on disposal of
subsidiaries
Gain on CB repurchase - (212)
Changes in assets and
liabilities:
Accounts receivable 114 (29,480)
Inventories 2,008 1,119
Project assets and deferred
project cost (64,395) (25,676)
Advances to suppliers (283) (6,354)
Amounts due from related
parties 119 257
Value added tax recoverable (4,342) 18,668
Prepaid expenses and other
assets 7,464 6,658
Prepaid land use rights, net 1,342 464
Accounts payable (26,413) (12,643)
Advances from customers 63,261 (8,198)
Income tax payable (51) (778)
Other current liabilities 2,099 (10,050)
Deferred revenue (4,010)
-
Other non-current assets (458)
-
Other long-term assets
Warranty (7,002) 3,821
Deferred taxes assets (468) 1,959
Other long-term liabilities 249
-
Net cash provided by (used in)
operating activities (38,625) (13,513)
------- -------
Investing activities:
Purchases of property, plant
and equipment (22,750) (4,162)
Advances for purchases of
property, plant and equipment (5,368) 5,140
Cash received from government
subsidy
Proceeds from disposal of
property, plant and equipment 74
-
Advance from disposal of
property, plant and equipment 2,916
-
Changes in restricted cash (12,248) (2,895)
Cash consideration for
investment, net of cash
received (885)
-
Net cash received (paid) on
settlement of derivatives (621) 179
Purchases of investment
securities
Proceeds from disposal of
subsidiaries
Net cash provided by (used
in) investing activities (38,882) (1,738)
------- ------
Financing activities:
Proceeds from bank borrowings 473,657 497,630
Proceeds from related parties 4,374
-
Repayment of bank borrowings (412,199) (464,338)
Proceeds from exercise of
stock options
Paid for CB repurchase
Share issuance costs
Repurchace from noncontrolling
interests 798
-
Repurchase of convertible
notes (25,931)
-
Cash paid for ADS/s
repurchase (981)
-
Net cash provided by (used
in) financing activities 66,630 6,380
------ -----
Effect of exchange rate
changes 2,174 (5,451)
Net increase (decrease) in
cash and cash equivalents (8,703) (14,322)
------ -------
Cash and cash equivalents,
beginning of period/year 37,336 38,045
Cash and cash equivalents, end
of period/year 28,633 23,723
====== ======
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SOURCE ReneSola Ltd.
