ReneSola Ltd announced its unaudited financial results from continuing operations for the third quarter ended September 30, 2017.
Third Quarter 2017 Highlights
Unless otherwise specified, the results presented herein exclude the discontinued operations. Discontinued operations relate to the Company's manufacturing business (including polysilicon, solar wafer, solar cell and solar module manufacturing) and LED distribution business which were disposed of in the third quarter of 2017. The Company's full financial results including discontinued operations are not available at this time.
- Revenue was $36.3 million, compared to the guidance range of $40 million to $45 million;
- Gross margin was 17.6%, compared to 69.9% in Q2 2017 and 8.4% in Q3 2016;
- Income (loss) before income tax and noncontrolling interests from continuing operations was $4.0 million, compared to a loss of $0.6 million in Q2 2017 and a loss of $0.8 million in Q3 2016;
- Recognized revenue of $26.3 million from sales of utility projects of approximately 5MW in the U.K., a 6.75MW in North Carolina and 1.3MW in Massachusetts, the United States, and the provision of EPC services of 5.7MW in China;
- Recognized revenue from the sale of electricity of $5.6 million with gross margin of 66.6%;
- Connected 13.9MW of rooftop projects in China which the Company intends to hold and 12.6MW of utility projects in Turkey with revenue expected to be recognized in Q1 2018;
- Solar power project pipeline of approximately 1.1GW, of which 579.3MW are late-stage.
Mr. Xianshou Li, ReneSola's Chief Executive Officer, commented, "The third quarter results were generally in-line with our expectation, as we continued to gain traction from our downstream project efforts. We are pleased to see the fundamentals for our project business have greatly improved. We have achieved profitability and retain a healthy balance sheet which would help to enhance our financing capability. As we had anticipated, we successfully connected a total of 26.5MW of projects in China and Turkey, and generated 36.8 million kwh of electricity from our independent power producer (IPP) business, primarily in China. In addition, our solar power project pipeline remains solid at around 1.1GW."
Mr. Li continued, "As discussed, while we have demonstrated our ability to successfully build and transfer solar power projects globally, we intend to retain more projects in selected regions and become an IPP as we realize high quality projects are unduplicated resources. Our competitive advantages lie in small-scale projects with high PPA/FiT price in diversified jurisdictions which we believe are of attractive return and will be the trend for the development of the industry. I am excited about the opportunities ahead of us, and continue to believe that our strong and capable team, extensive financing relationships and track record of success in project development will enable us to profitably grow our business."
Third Quarter 2017 Financial Results
Revenue from continuing operations was $36.3 million was up 2,122.7% q/q and up 23.9% y/y.
- Revenue from the Build-Transfer (BT) and EPC business was $26.3 million as we recognized revenue from sales of projects of approximately 5MW in the U.K, 6.75MW in North Carolina and 1.3MW in Massachusetts, the United States, and the provision of EPC services of 5.7MW in China.
- Revenue from the sale of electricity was $5.6 million with gross margin of 66.6%. The Company generated 36.8 million kwh of electricity from its operating projects in China, Romania and the U.K during the quarter.
Gross profit of $6.4 million was up 457.7% q/q and 157.8% y/y. Gross margin was 17.6%, compared to 69.9% in Q2 2017 and 8.4% in Q3 2016.
Operating expenses were $2.5 million, down from $3.2 million in Q2 2017 and up from $2.0 million in Q3 2016. Sales and marketing expenses were $0.6 million, up from $0.4 million in Q2 2017. The sequential increase was mainly due to higher commission expenses. General and administrative expenses were $1.9 million, down from $2.1 million in Q2 2017.
Operating income was $3.8 million, compared to operating loss of $2.0 million in Q2 2017 and operating income of $0.4 million in Q3 2016.
Total non-operating income of $0.1 million included interest expenses of $1.1 million and foreign exchange gains of $1.2 million.
Income (loss) before income tax and noncontrolling interests from continuing operations was $4.0 million, compared to a loss of $0.6 million in Q2 2017 and a loss from continuing operations of $0.8 million in Q3 2016.
The Company had cash and cash equivalents of $5.2 million as of September 30, 2017, compared to $3.0 million as of June 30, 2017. Long-term borrowings were $30.4 million as of September 30, 2017, associated with the Romanian projects. Other long-term liabilities were $60.6 million as of September 30, 2017, associated with the financial leasing payables for rooftop projects in China.
Recent Business Update
- In August 2017, the Company announced the sale of project rights of 13.3MW of community solar projects in Minnesota to Nautilus Solar Energy, LLC with revenue expected to be recognized in Q4 2017.
- In September 2017, the Company completed the disposition of manufacturing and LED distribution businesses and the related liabilities.
- In December 2017, the Company announced that Sequoia Economic Infrastructure Income Fund had agreed to provide senior debt facility for ReneSola's 55MW of projects in Poland, each with a capacity of 1MW.
- During the quarter, the Company obtained over RMB 300 million of financing for its rooftop projects in China.
Operating Assets and Completed Projects for Sale
The Company continues to pursue opportunities in small-scale projects in diversified regions and believes its strategy meets the development trend of solar energy. ReneSola currently owns over 135MW of rooftop projects in operation, which are concentrated in a handful of eastern provinces of China with attractive development environments. The Company currently has over 100MW of rooftop projects under construction and anticipates owning approximately 200MW of rooftop projects in China by the end of 2017.
The Company currently has 17.6MW of completed projects for sale.
For the fourth quarter of 2017, the Company's project business is expected to generate revenue in the range of $55 to $60 million and overall gross margin in the range of 10% to 15% with the gross margin of IPP business in the range of 48% to 53%. The Company expects to connect 60MW to 80MW of projects during the fourth quarter of 2017.