First Quarter 2009 Financial and Operating Highlights
— Solar module shipments were 48.8 MW, compared to the Company’ s
previous guidance of 50 MW to 55 MW, representing a decrease of 15.3%
sequentially and an increase of 65.5% year-over-year
— Total net revenues were
sequentially and an increase of 9.5% year-over-year
— Gross margin was 17.2%, exceeding the Company’s previous guidance of
between 15% and 17%, compared to 9.6% in the fourth quarter of 2008
— Operating income and operating margin were
respectively, compared to
quarter of 2008
-- Net loss was $10.6 million, which includes
-- a $6.5 million tax liability accrued in the first quarter resulting
from a reversal in the government's approval for a past tax holiday
-- a charge of $4.6 million for the estimated cost in connection with
the cancellation of two polysilicon supply agreements
— Earnings per fully-diluted ADS was negative
negative impact of
“Our first quarter was adversely affected by unusually harsh weather in
our key European markets, tightened credit conditions for our customers and
the general slowdown in world economic activities,” said Mr.
,
Chairman and CEO of
. “Improved conditions beginning in April have
contributed to increasing customer deliveries and higher levels of new
contracts and projects.”
In conjunction with our recent visits involving over 30 meetings with our
customers worldwide, we received positive feedback confirming satisfaction
with our high quality products and greater recognition of our brand name. Our
core strengths such as enhanced brand recognition, high quality products and
industry leading low cost platform enable us to yield attractive margins in
both new and existing PV markets, despite challenging market and macroeconomic
conditions. In the first quarter, we continued to leverage our low cost
platform by reducing our manufacturing cost to approximately
for our multicrystalline product.
Moreover, we remain committed to ensuring that we have sufficient
financial resources to maintain a strong balance sheet. In line with our focus
on maintaining a strong cash position, we have increased our in-house
production capacities for cells and modules to over 400 MW as of
a result of improvements in production process enhancements and improved cell
conversion efficiency, which required minimal capital investment.
Finally, we are encouraged by recent announcements by the Ministry of
Finance, outlining
expected to commence this year. We are also involved in the development of a
local
program to potentially compliment the national subsidies. We are confident
that our
created by these programs. To-date we have submitted 8 initial proposals for
the national subsidy program in our name and through project joint venture.
In addition to the above, due to the current economic environment, we are
continuing to focus on improvements in several areas, including accelerating
the reductions in our manufacturing costs, increasing our cell and module
efficiencies, leveraging our silicon procurement flexibilities, and expanding
our sales capabilities to capture growth opportunities in existing and
emerging PV markets.
Recent Business Highlights
During the first quarter of 2009, the Company
— Continued to benefit from strong customer loyalty from its well-
established PV partners throughout
greater visibility and access to commercial and project financing
— Increased market share in growing PV markets such as Benelux,
reflecting a diversification strategy that includes 20 established and
emerging PV markets, such as
United States
— Increased sales to project system integrators, which currently
represent more than half of our total sales
— Continued to receive strong support from its Spanish partners who are
increasingly active in developing projects outside of
In April of 2009, the Company
— Announced the completion of a 4.7 MW PV facility, one of the largest
rooftop projects in
— Announced three new sales agreements in
42 MW of PV modules for delivery in 2009, which has given the Company greater
visibility in its order book
— Expanded its European Sales and Marketing team with the appointments of
two key management positions. Our new managers have over 33 years of combined
solar PV and other renewable energy experience.
— Submitted proposals involving eight projects for
subsidy program
First Quarter 2009 Results
Net Revenues
net revenues in the first quarter of 2009 were
million, a decrease of 38.9% sequentially and an increase of 9.5% year-over-
year. Total shipments were 48.8 MW, compared to 57.6 MW in the fourth quarter
of 2008 and 29.5 MW in the first quarter of 2008. The sequential decline in
total shipments was primarily due to weakened demand given prolonged winter
conditions in our major European markets, limited customer visibilities to PV
system purchase financing, and market inventory adjustments relating to
government incentive reduction legislation in
approximately
Gross Profit and Margin
Gross profit in the first quarter of 2009 was
quarter of 2008. Gross margin was 17.2% in the first quarter of 2009,
representing an increase from 9.6% in the fourth quarter of 2008 and a
decrease from 25.8% year-over-year. The sequential increase was due primarily
to the benefits of lower average silicon purchase prices. The year-over-year
decrease was primarily due to lower module average selling price resulting
from demand factors, which included abnormal seasonality impacts, increased
industry capacity and availabilities of silicon feedstock, and the recent
global economic and financial climate. The Company continued to focus its
efforts on reducing its manufacturing cost per watt through ongoing efficiency
gains linked to improved supply chain management, higher cell and module
efficiencies, and proprietary process enhancements in our ingot, wafer, cell
and module value areas.
Operating Expense, Income and Margin
Operating expenses in the first quarter of 2009 were
Company’s operating expenses accounted for 12.0% of its first quarter net
revenues, an increase from 7.8% in the fourth quarter of 2008 and an increase
from 9.0% in the first quarter of 2008. The sequential increase was a
percentage of revenue as primarily due to the decline in total net revenues.
Operating expenses in the first quarter of 2009 included
share-based compensation expenses, compared to
quarter of 2008 and
Operating expenses include a charge of
estimated cancellation cost of two polysilicon supply agreements. Operating
income in the first quarter of 2009 was
in the fourth quarter of 2008 and
Operating margin was 5.2% in the first quarter of 2009, compared to 1.8% in
the fourth quarter of 2008 and 16.7% in the first quarter of 2008.
Net Interest Expense
Net interest expense in the first quarter of 2009 was
compared to
first quarter of 2008. The sequential decrease was the result of a lower
average interest rate, while the year-over-year increase was primarily due to
additional bank borrowings to support the growth of the Company’s operations.
Foreign Currency Exchange
Foreign currency exchange loss was
2009, compared to a
million loss in the first quarter of 2008. This loss was primarily due to the
depreciation of the Euro against the US dollar in the first quarter, the
effect of which was partially mitigated by the Company’s increased utilization
of foreign currency forward contracts to hedge its exposure.
Income Tax Expense
In
Hi-tech Development Zone notifying us that the exemption and 50% tax reduction
for our taxable profit representing the proportion of increase in registered
capital had expired on
additional one-time tax payment of
Solar Energy Co., Ltd.’s taxable profit in 2008. Please see the Company’s
2008 annual report on Form 20-F filed with the U.S. Securities and Exchange
Commission.
Net Income and EPS
Net loss was
the first quarter of 2008. Net loss includes the impact of the
supply agreement cancellation charges, the
foreign currency exchange loss of
Earnings per fully diluted ADS were negative
of the supply agreement cancellation charge, the additional tax payment, and
the foreign currency exchange loss, net of tax effect, were approximately
Financial Condition
As of
equivalents, and restricted cash. The Company’s working capital balance was
million were long-term borrowings. Shareholders’ equity was
compared to
As of
to approximately
unused available credit line. The Company increased its foreign currency
hedging program during the first quarter of 2009 using foreign currency
forward contracts between the Euro and the US dollar, with the goal of
mitigating, to some extent, the effects of exchange rate volatility.
Second Quarter and Full Year Guidance
For the second quarter of 2009, the Company expects to ship between 60 MW
to 65 MW of PV modules. The Company believes gross margin for the second
quarter will likely be between 18% and 20%.
For the full year of 2009 the Company reiterates the guidance for total PV
module shipments between 350 MW to 400 MW, representing an increase of 74% to
99% from 2008.
Operations and Business Outlook
Manufacturing Cost Reduction
For the full year 2009, the Company expects to reduce its manufacturing
costs by at least 15% to 20% through a combination of technology and
manufacturing process improvements together with supply chain and logistics
management initiatives currently under testing or development.
Silicon Procurement
The Company maintains a diversified feedstock procurement strategy
consisting of short, medium, and long-term supply contracts, which include
agreements entered into in the first quarter of 2007. The Company will
continue to maintain competitive silicon costs relative to the current market
price. Several of our long-term contracts contain price adjustment clauses
that offer a market-linked price formula that would apply if the market price
is lower than the originally agreed price in any given year. The Company
continues to renegotiate other medium-term and long-term contracts in efforts
to achieve favorable price and payment terms relative to current market
conditions.
Cell Technology and Product Development Update
Through its research and development and technology transfer, the Company
continues to improve its cell manufacturing processes to meet its previously
announced 2009 conversion efficiency targets of 18.5% and 17.5% for its
monocrystalline and multicrystalline product lines, respectively.
Based on recent on-site laboratory test production, the Company has
achieved monocrystalline cell efficiency of 18.0% by leveraging advanced
passivation and metallization techniques involved in the PV manufacturing
process.
In addition to improving its module output and low manufacturing cost
platform efficiencies, the Company’s technology roadmap includes further
enhancement of its Building Integrated PV (BIPV) module product lines, as well
as targeted application products offering architecturally friendly design
advantages and others for industry-specific use applications.
Existing Cell and Module Capacity
Through yield increases derived from increased cell efficiency rates and
improved production efficiencies, the Company’s annualized in-house production
capacities have been increased to over 400 MW for cells and modules in
2009. These expanded capacities, located within the Company’s existing west
campus facilities will support the Company’s previously announced target for
2009 PV module shipments of between 350 MW to 400 MW.
Conference Call
The Company will host a conference call at
to discuss the results for the quarter ended
,
Chairman and CEO of
, will be
, Chief Financial Officer,
, Chief Operating Officer,
, Vice President, International
Procurement and Business Development,
, Vice President, Sales
and Marketing, and
, Director of Investor Relations.
To participate in the conference call, please dial the following number
five to ten minutes prior to the scheduled conference call time: 1(800)884-
2382. International callers should dial +1(660)422-4933. The conference ID for
the call is 9965-1486.
If you are unable to participate in the call at this time, a replay will
be available on
access the replay, dial 1(800)642-1687 or 1(706)645-9291, and enter the
conference ID 9965-1486.
This conference call will be broadcast live over the Internet and can be
accessed by all interested parties on
website at
http://www.trinasolar.com. To listen to the live webcast, please go to
Solar’s
website at least fifteen minutes prior to the start of the call to
register, download, and install any necessary audio software. For those unable
to participate during the live broadcast, a replay will be available shortly
after the call on
website for 90 days.
About Trina Solar Limited
Trina Solar Limited (NYSE: TSL) is a well recognized manufacturer of high
quality modules and has a long history as a solar PV pioneer since its
founding in 1997 as a system installation company.
is one of the
few PV manufacturers that has developed a vertically integrated business model
from the production of monocrystalline and multicrystalline ingots, wafers and
cells to the assembly of high quality modules.
products provide
reliable and environmentally-friendly electric power for a growing variety of
end-user applications worldwide. For further information, please visit
Solar’s
website at http://www.trinasolar.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements other than statements of historical fact in this
announcement are forward-looking statements, including but not limited to, the
Company’s ability to raise additional capital to finance the Company’s
activities; the effectiveness, profitability, and marketability of its
products; the future trading of the securities of the Company; the ability of
the Company to operate as a public company; the period of time for which its
current liquidity will enable the Company to fund its operations; the
Company’s ability to protect its proprietary information; general economic and
business conditions; the volatility of the Company’s operating results and
financial condition; the Company’s ability to attract or retain qualified
senior management personnel and research and development staff; and other
risks detailed in the Company’s filings with the Securities and Exchange
Commission. These forward-looking statements involve known and unknown risks
and uncertainties and are based on current expectations, assumptions,
estimates and projections about the Company and the industry. The Company
undertakes no obligation to update forward-looking statements to reflect
subsequent occurring events or circumstances, or to changes in its
expectations, except as may be required by law. Although the Company believes
that the expectations expressed in these forward looking statements are
reasonable, they cannot assure you that their expectations will turn out to be
correct, and investors are cautioned that actual results may differ materially
from the anticipated results.
Trina Solar Limited
Unaudited Consolidated Statement of Operations
(US dollars in thousands, except ADS and share data)
For the Three Months Ended
March 31, December 31, March 31,
2009 2008 2008
Net revenues $132,109 $216,338 $120,671
Cost of revenues 109,402 195,535 89,595
Gross profit 22,707 20,803 31,076
Operating expenses
Selling expenses 4,309 5,348 2,958
General and
administrative
expenses 10,660 11,308 7,165
Research and
development expenses 909 278 749
Total operating
expenses 15,878 16,934 10,872
Operating income 6,829 3,869 20,204
Exchange gain or
(loss) (7,646) 3,209 (4,001)
Interest expense (6,270) (7,011) (3,473)
Interest income 859 544 1,240
Derivative gain
(loss) 170 (1,067) -
Other income
(expense) (105) 1 (25)
Income (loss)
before income
taxes (6,163) (455) 13,945
Income tax
(expense) (4,459) (213) (1,072)
Net income (loss) $(10,622) $(668) $12,873
Earnings (loss)
per ADS
Basic (0.423) (0.027) 0.515
Diluted (0.423) (0.027) 0.512
Weighted average
ADS outstanding
Basic 25,091,336 25,072,076 24,972,588
Diluted 25,091,336 25,072,076 25,128,969
Trina Solar Limited
Unaudited Consolidated Balance Sheet
(US dollars in thousands)
March 31, December 31,
2009 2008
ASSETS
Current assets:
Cash and cash
equivalents $153,325 $132,224
Restricted cash 40,788 44,991
Inventories 79,109 85,687
Accounts receivable,
net 169,583 105,193
Advances to suppliers 36,631 42,247
Prepaid expenses and
other current assets 10,395 9,541
Total current assets 489,831 419,883
Property, plant and
equipment 363,816 357,594
Intangible assets, net 26,779 26,915
Advances to suppliers
- long-term 118,325 130,352
Deferred tax assets 5,064 2,808
Other noncurrent
assets 2,368 2,564
TOTAL ASSETS $1,006,183 $940,116
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings,
including current
portion of long-term
debt $305,524 $248,558
Accounts payable 70,339 62,504
Income tax payable 8,444 3,649
Accrued expenses and
other current
liabilities 23,762 21,003
Total current
liabilities 408,069 335,714
Long-term bank
borrowings 14,629 14,631
Long-term advances
from customers
Convertible bond
payable 133,721 133,248
Accrued warranty costs 13,789 12,473
Other noncurrent
liabilities 12,546 10,993
Total liabilities 582,754 507,059
Ordinary shares 30 30
Additional paid-in
capital 309,894 308,898
Retained earnings 102,090 112,713
Other comprehensive
income 11,415 11,416
Total shareholders'
equity 423,429 433,057
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,006,183 $940,116
For further information, please contact:
Trina Solar Limited Brunswick Group
Terry Wang, CFO Caroline Jinqing Cai
Phone: + (86) 519-8548-2009 (Changzhou) Phone: + (86) 10-6566-2256
Thomas Young, Director of Michael Fuchs
Investor Relations Phone: + (86) 10-6566-2256
Phone: + (86) 519-8548-2009 (Changzhou) Email: trina@brunswickgroup.com
Email: ir@trinasolar.com
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