ReneSola (SOL) Q1 Loss Narrower Than Expected, Revenues Down

ReneSola Ltd. (NYSE:SOL) reported a loss of $1.16 per American Depositary Share (ADS) in the first quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of $1.29. However, the company had reported earnings of 30 cents in the year-ago quarter.

Revenues

ReneSola’s first-quarter net revenue of $156.6 million surpassed the Zacks Consensus Estimate of $139 million by 12.7%. However, revenues deteriorated 39.9% year over year.

Management attributes the sales decline to lower module ASP's and reduced product shipments to external customers.

Shipments

In the quarter under review, external module shipments were 266.8 megawatts (MW), down 23.9% year over year and grew 19.3% sequentially. Wafer shipments totalled 259.2 MW, down 26.2% year over year and 15.3% sequentially.

Operational Highlights

Gross margin of 1.1% in the quarter shrank 1600 basis points (bps) year over year and 100 bps sequentially. The sequential contraction was mainly due to lower module ASPs and annual maintenance of our polysilicon plant.

Operating expenses amounted to $19.5 million, down 39.6% from the prior-year quarter and 27.2% from the preceding quarter.

Operating loss during the quarter was $17.8 million. The company had reported operating income of $12.2 million in first-quarter 2016 and loss of $21.8 million in fourth-quarter 2016.

Financial Condition

As of Mar 31, 2017, ReneSola had cash and cash equivalents plus restricted cash of $144.4 million compared with $133.2 million as of Dec 31, 2016.

Net cash outflow from operating activities in the first quarter was $33.8 million compared with cash outflow of $4.4 million in the year-ago period.

Long-term borrowings were $31.1 million as of Mar 31, 2017, up from $28.8 million as of Dec 31, 2016.

Guidance

The company expects second-quarter 2017 revenues of $180−$200 million with external wafer shipments in the range of 220 MW−240 MW and external module shipments in 230 MW−250 MW band.

For 2017, the company reiterated its revenue expectation in the range of $900−$1000 million.

Peer Releases

First Solar Inc. (NASDAQ:FSLR) reported first-quarter 2017 earnings of 25 cents a share. The Zacks Consensus Estimate was pegged at a loss of 13 cents. The reported number declined 84.9% from the prior-year figure of $1.66.

SunPower Corp. (NASDAQ:SPWR) reported first-quarter 2017 loss of 42 cents per share, narrower than the Zacks Consensus Estimate of loss of 66 cents. In the year-ago period, the company had posted loss of 42 cents.

JA Solar Holdings Co., Ltd. (NASDAQ:JASO) posted first-quarter 2017 adjusted earnings of 3 cents per diluted American Depositary Share (ADS). The Zacks Consensus Estimate was pegged at a loss of 2 cents.

Zacks Rank

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

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