ReneSola (SOL) Tops Q2 Earnings, Stock Down On View Cut

ReneSola Ltd. (NYSE:SOL) reported earnings of 5 cents per American Depositary Share (“ADS”) in the second quarter of 2016, beating the Zacks Consensus Estimate of 3 cents by 66.7%. The reported figure also compared favorably with the year-ago tally of a loss of 2 cents.

The company has made significant progress in transforming itself from a solar product manufacturer to a multi-faceted participant across the green energy value chain. Moreover, it has reduced its debt level substantially.

Revenues

ReneSola’s second-quarter net revenue of $250 million missed the Zacks Consensus Estimate of $282 million by 10.7%. Reported revenues also deteriorated 6.8% year over year and 4.1% sequentially.

This Chinese solar manufacturer’s share price dropped 3.15% post the lower-than-expected revenue performance and slashing of sales forecast as panel shipments slipped.

The company attributes the decline to lower module shipments to external customers, and reduced wafer average selling prices (ASP) as it has strategically directed more shipments toward downstream projects.

Shipments

In the quarter under review, external module shipments were 282.4 megawatts (MW), down 12.3% year over year and 19.5% sequentially. Wafer shipments totaled 423.3 MW, up 50.3% year over year and 20.6% sequentially.

Operational Highlights of the Quarter

Gross margin of 16.5% in the quarter remained flat year over year but contracted 60 basis points sequentially.

Operating expenses increased 12.6% from the prior-year quarter and 12.4% from the preceding quarter to $34.8 million.

Operating income during the quarter was $6.4 million, down 39% from $10.5 million in second-quarter 2015 and 47.5% from $12.2 million in the preceding quarter.

Financial Condition

As of Jun 30, 2016, ReneSola had cash and cash equivalents plus restricted cash of $163.4 million, compared with $178.4 million as of Dec 31, 2015.

Net cash used in operating activities in the first half of 2016 was $13.5 million, compared with $20.6 million in the year-ago period.

Total debt was $716.5 million as of Jun 30, 2016, down from $737.2 million as of Mar 31, 2016.

Guidance

The company expects third-quarter 2016 revenues at around $200 million and gross margin of roughly 10%. This projection mainly shows the impact from high polysilicon prices accompanied with lower wafer prices.

For 2016, management lowered its revenue guidance to the range of $900 million to $1.1 billion from its previous projection of $1.0 billion to $1.2 billion.

Peer Releases

JA Solar Holdings Co. Ltd. (NASDAQ:JASO) posted second-quarter 2016 adjusted earnings of 30 cents per diluted American Depositary Share (ADS), missing the Zacks Consensus Estimate of 59 cents by a wide 49.2%. Earnings, however, improved from the year-ago figure of 27 cents by 11.1%.

Yingli Green Energy Holding Company Ltd. (NYSE:YGE) , also known as Yingli Solar, reported operating income of 90 cents per ADS in second-quarter 2016. The Zacks Consensus Estimate was a loss of 30 cents. Moreover, in the year-ago quarter, the company reported a loss of $5.30.

Trina Solar Ltd. (NYSE:TSL) reported earnings of 42 cents per ADS in the second quarter of 2016, beating the Zacks Consensus Estimate of 34 cents by 23.5%. Earnings were flat with the year-ago level.

Zacks Rank

ReneSola presently carries a Zacks Rank #3 (Hold).

RENESOLA LT-ADR Price, Consensus and EPS Surprise

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