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ReneSola Ltd. (SOL - Analyst Report) in the fourth quarter of 2012 reported adjusted loss per American Depositary Share (ADS) of 29 cents per share, beating the Zacks Consensus Estimate of 37 cents loss per ADS. Numbers however were short of the year-ago quarterly loss of 21 cents per ADS.

For full year 2012 the company digested an adjusted loss per ADS of $2.36, falling short of both the Zacks Consensus Estimate of $2.15 per ADS loss and year-ago earnings per ADS of 0.4 cents.

Operational Results

Net revenues for the quarter rose to $306.5 million from $187.7 million in the prior-year quarter, as a result of a significant increase in solar module shipments, particularly to China. Reported quarterly revenue also beat the Zacks Consensus Estimate of $252 million.

Net revenues for full year 2012 fell to $969.1 million from $985.3 million in 2011. However this came above the Zacks Consensus Estimate of $845 million.

Total solar product shipments in the fourth quarter of 2012 were 713.2 megawatts, an increase of 33.9% from 532.8 megawatts in the third quarter of 2012. The sequential increase in solar product shipments was mainly the result of increased demand for the company's solar modules across a number of geographic regions, particularly China, as well as the result of seasonally strong year-end demand and the increasing competitiveness of solar power as a power source.

Overall, ReneSola recorded a net loss of $49.9 million compared with a net loss of $36.7 million in the year-ago quarter.

Financial Condition

As  of  Dec 31, 2012,  ReneSola  had  cash  and  cash  equivalents  plus  restricted  cash  of  $268.1 million, compared with $335.2  million at the end of the third quarter of  2012. Net cash inflow from operating activities was $25.8 million in the fourth quarter 2012, compared to net cash outflow of $46.0 million in the third quarter of 2012. Total debt was $790.2 million at the end of 2012, compared with $850.3 million at the end of the third quarter of 2012. Short-term borrowings were $733.6 million at the end of 2012, compared with $715.8 million at the end of the third quarter of 2012.

Guidance

For the first quarter of 2013, the company expects total solar wafer and module shipments in the range of 660 MW to 680 MW. Revenues are expected in the range of $260 million to $270 million and gross margin is expected to be positive.

For the full year 2013, the company expects total solar wafer and module shipments in the range of 2.7 GW to 2.9 GW.

Our Take

Based out of China, ReneSola is a leading global manufacturer of solar wafers and a producer of solar power products. Capitalizing on proprietary technologies, economies of scale, high production quality, technological innovations and know-how, and its in-house virgin polysilicon and solar cell and module production capabilities, ReneSola provides its customers with solar wafer products and processing services. The company possesses a global network of suppliers and customers.

ReneSola introduced the high-efficiency second generation Virtus II wafers which utilize a new in-house proprietary Virtus A++ manufacturing process, alleviating the need for crystalline seeds. The Virtus II modules’ use of the Virtus A++ manufacturing process produces high-efficiency Virtus A++ wafers with lower light-induced degradation and lower processing cost. Additionally, the company's newly launched microinverter, Micro Replus, formally obtained a Certificate of Approval from SAA Approvals, a third-party certification body accredited to issue Certificates of Approval for electrical equipment that complies with the safety requirements of the applicable Australian standard. ReneSola has also begun research on small-scale storage systems.

Going forward, ReneSola expects to continue to reduce its solar module manufacturing costs through improvements in its manufacturing methods and reduction in material costs. The company presently retains a short-term Zacks Rank #3 (Hold). However, ReneSola’s fortunes have been impacted by the industry-wide oversupply glut leading to sharply falling Average Selling Prices, tepid module demand in Europe, and rising competition in the market. As a result, among major solar operators only Canadian Solar Inc. (CSIQ - Analyst Report) holds a short-term Zacks Rank #2 (Buy). Of the rest of the big names like Solar Power, Inc. and First Solar Inc. (FSLR - Analyst Report), all hold a Zacks Rank #3 (Hold).

 

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