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ReneSola Provides Business Update and Announces Second Quarter 2017 Results

ReneSola Provides Business Update and Announces Second Quarter 2017 Results

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–Transaction to Transform Company into Pure Play Downstream Player–

— Company also Reports Second Quarter 2017 Results–

SHANGHAI, Sept. 27, 2017 — ReneSola Ltd (“ReneSola” or the “Company”) (www.renesola.com) (NYSE: SOL), a leading fully-integrated solar project developer and provider of energy efficient products, today provides a business update and announces its unaudited second quarter 2017 results.

As announced on September 25, the Company has entered into a definitive share repurchase and subscription agreement (the “SPA”) with Mr. Xianshou Li, the Company’s Chairman and Chief Executive Officer (the “Buyer”) for the sale of the Company’s manufacturing (including polysilicon, solar wafer, solar cell and solar module manufacturing) and LED distribution businesses (the “Acquired Businesses”). The transaction will also transfer substantially all of ReneSola’s related indebtedness to Li. The transaction will result in:

i) The Company will no longer be liable for the bank borrowings in excess of RMB 3 billion, and the Buyer and his spouse will continue to provide personal guarantees for a majority of such bank’s borrowings;

ii) The acquired businesses will cancel approximately $217.3 million of intercompany payables owed to it by the Company; and

iii) The Company will issue 180 million ordinary shares to ReneSola Singapore Pte. Ltd., an entity to be fully owned by the Buyer upon completion.

Mr. Li commented, “This transaction completes the strategic transformation that was initiated in 2015. We will exit the manufacturing business, which has been impaired by overcapacity, pricing pressure and low profitability, and will become a pure play in the rapidly growing and profitable project development market. We believe this is the best path forward for ReneSola. The losses and a weakened balance sheet of the manufacturing business have been significant constraints on the growth of our downstream business. I am very excited to see ReneSola start anew with a stronger balance sheet, a highly capable team and significant growth opportunities. This transaction represents the beginning of a new chapter for ReneSola.”

This transaction will significantly improve the Company’s balance sheet, providing the financial flexibility necessary to drive the growth of the Company’s project development business. The table below summarizes the pro forma changes in the Company’s balance sheet, based on the terms of the transaction when it is completed.

All amounts, other than
percentages, are in millions
of US$
Post- Transaction

June 30, 2017

Pre-Transaction

June 30, 2017

Total Asset 250.0 1,154.9
Total Liabilities 169.5 1,140.2
      —-Bank Borrowings 33.5 701.7
Total Equity 80.5 14.7
Debt-Asset Ratio 67.8% 98.7%

The table below outlines the key benefits that ReneSola expects to derive from this transaction.

Key Benefits Details
Low Leverage Eliminate over RMB 3 billion of bank debt
Debt-asset ratio of 68% down from 98.7% as of
June 30, 2017
Lower Management & Financial Costs Management costs are expected to drop from $46
million to $12 million per year
Financial costs to further decrease
Enhanced Financing Ability for Projects Lower corporate leverage improves project
bankability
Healthy balance sheet enables the Company to
lower financing cost and achieve attractive IRR
for projects
Restore Investor Confidence Operate growing project business with proven
track record
Spin-off indebted manufacturing business
Solid global project pipeline to ensure future
growth
Strategic Success Completes multi-year transition to downstream
business

Project Development Strategy

Since entering the project development business, ReneSola has developed over 480 MW of projects around the world. These projects range from utility scale to smaller rooftop distributed generation. They share the common traits of operating in stable, mature markets with attractive subsidies. The Company believes that its strong track record in solar project development will enable it to accelerate the development of its project pipeline, as well as attract project financing on favorable terms.

While Build-Transfer continues to be an important strategy for the foreseeable future, ReneSola also intends to retain more projects in selected regions and become an independent power producer (“IPP”). The IPP model is especially attractive, due to the resulting high margin recurring revenue. Over time, the Company intends to shift a meaningful amount of its revenue to recurring power sales.

The Company believes the China rooftop solar market is an especially lucrative opportunity and has aggressively established its presence in that market. Rooftop projects can provide steady cash flow, double-digit IRRs, and reduced risk of curtailment or subsidy delays. ReneSola currently owns over 130 MW of rooftop projects under development, concentrated in a handful of eastern provinces of China with attractive development environments. The Company anticipates to own 150 MW of China’s rooftop projects by the end of 2017.

Operating Assets Capacity (MW)
China DG 131.2
-Zhejiang 33.3
-Anhui 28.8
-Henan 57.9
-Jiangsu 5.7
-Shandong 5.5
Romania 15.4

Mr. Li further commented, “We have demonstrated our ability to successfully build and transfer solar power projects globally. Our project development team consists of 314 dedicated employees around the world. Our strong and capable team, extensive financing relationships and track record of success give us high confidence that we can profitably grow the ‘new’ ReneSola.”

The following table sets forth the Company’s late-stage project pipeline by location:

Project Location Shovel-ready (MW)
USA 151.8
UK 4.3
Japan 17.5
Canada 8.6
Turkey 133.0[1]
France 0.3
Poland 55.0
Thailand 5.0
China DG 104.5
Total 480.0

[1] With the start of operation, ReneSola holds 50% of the economics in the projects, which are held for sale and expected to be sold in the normal course upon connection or shortly thereafter.
As of September 10, 2017, the Company had a pipeline of over 1 GW of projects in various stages, of which 480 MW are projects that are “shovel-ready”. The shovel-ready projects include (i) oversea projects that ReneSola has the right to develop or has self-originated in that ReneSola has obtained definitive agreement, and (ii) projects in China that are either owned by ReneSola and have been filed with PRC National Development and Reform Commission, or third-party projects to which the Company has signed definitive agreements for EPC services. The Company has identified a number of opportunities in China’s domestic distributed generation market, and had 104.5 MW of such projects in the shovel-ready stage as of September 10, 2017.

Outlook

For the third quarter of 2017, the Company’s project business is expected to generate revenue in the range of $40 to $45 million and overall gross margin in the range of 15% to 20% with the gross margin of IPP business in the range of 65%-70%. The Company expects to connect 20 to 30 MW of projects during the third quarter of 2017.

Second Quarter 2017 Financial Results

The Company today also announced its unaudited financial results for the second quarter of 2017. Because the majority of revenue and losses are related to the Acquired Businesses being sold, the consolidated results are not indicative of the Company’s future financial outlook. As such, the Company is only presenting a brief summary for informational purposes.

Second quarter revenue of $151.6 million was down 3.2% sequentially and down 39.4% year-over-year. Net loss was $31.5 million, compared to net loss of $23.2 million in Q1 2017 and net income of $5.5 million in Q2 2016.

The Company recognized revenue of $3.1 million from the sale of rooftop projects of 3.0 MW in China’s domestic distributed generation market in Q2 2017. The Company also signed an agreement to sell a utility-scale project located in North Carolina with a capacity of approximately 6.75 MW with revenue expected to be recognized in Q3 2017. Subsequent to the end of the quarter, the Company signed additional agreements to sell projects overseas, including (i) two ground-mount projects in the United Kingdom with a combined capacity of approximately 10 MW; and (ii) a portfolio of ground-mount projects in North Carolina with an aggregate capacity of 24 MW. These projects are expected to be connected to the grid by December 2017.

Conference Call Information

ReneSola’s management will host an earnings conference call on September 27, 2017 at 8:30 a.m. U.S. Eastern Time (8:30 p.m. China Time).

Dial-in details for the earnings conference call are as follows:


Phone Number
Toll-Free Number
United States +1 8456750437 +1 8665194004
Hong Kong +852 30186771 +852 800906601
Mainland China +86 8008190121

+86 4006208038

Other International +65 67135090

Please dial in 10 minutes before the call is scheduled to begin and provide the passcode to join the call. The passcode is 77739816.

A replay of the conference call may be accessed by phone at the following numbers until October 5, 2017. To access the replay, please again reference the conference passcode 77739816.


Phone Number
Toll-Free Number
United States +1 6462543697 +1 8554525696
Hong Kong +852 30512780 +852 800963117
Mainland China +86 8008700206

+86 4006322162

Other International +61 281990299

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of ReneSola’s website at http://www.renesola.com.

About ReneSola

Founded in 2005, and listed on the New York Stock Exchange in 2008, ReneSola (NYSE: SOL) is an international leading brand of solar project developer and technology provider of energy efficient products. Leveraging its global presence, expansive distribution and sales network, ReneSola is well positioned to develop green energy projects with attractive return and provide its highest quality green energy products around the world. For more information, please visit www.renesola.com.

Safe Harbor Statement

This press release contains statements that constitute ”forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Whenever you read a statement that is not simply a statement of historical fact (such as when the Company describes what it “believes,” “expects” or “anticipates” will occur, what “will” or “could” happen, and other similar statements), you must remember that the Company’s expectations may not be correct, even though it believes that they are reasonable. The Company does not guarantee that the forward-looking statements will happen as described or that they will happen at all. Further information regarding risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements is included in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s annual report on Form 20-F. The Company undertakes no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even though the Company’s situation may change in the future.

 RENESOLA LTD
 Unaudited Consolidated Balance Sheets
 (US dollars in thousands)
Jun 30, Mar 31,  Jun 30,
2017 2017 2016
 ASSETS 
 Current assets:
 Cash and cash equivalents 28,633 26,634 23,723
 Restricted cash 110,661 117,783 139,645
 Accounts receivable, net of allowances for doubtful
accounts
112,185 108,230 185,573
 Inventories 92,291 153,220 165,470
 Advances to suppliers-current 15,891 15,727 23,286
 Amounts due from related parties 12,553 9,385 77
 Value added tax recoverable 8,084 10,956 5,911
 Prepaid income tax 1,142 1,115 4,338
 Prepaid expenses and other current assets 20,723 16,002 18,288
 Project assets 116,869 75,574 64,756
 Deferred convertible notes issue costs-current
 Derivative assets 124 2,077
 Assets held-for-sale 8,540
 Deferred tax assets-current, net
 Total current assets   519,156 543,166 633,144
 Property, plant and equipment, net 537,595 486,278 568,090
 Prepaid land use right, net 32,204 31,923 35,842
 Deferred tax assets-non-current, net 16,766 19,168 14,403
 Advances for purchases of property, plant and
equipment
3,554 1,824 285
 Deferred project costs 20,913 19,153 17,576
 Project assets-noncurrent 4,537 6,103 9,463
 Other long-lived assets 20,201 18,706 9,943
 Total assets   1,154,926 1,126,321 1,288,746
 LIABILITIES AND SHAREHOLDERS’ EQUITY 
 Current liabilities:
 Convertible bond payable-current
 Short-term borrowings 671,432 647,587 716,512
 Accounts payable 203,185 221,580 280,609
 Advances from customers-current 83,954 36,701 20,342
 Amounts due to related parties 5,076 4,575 2,831
 Other current liabilities 61,473 59,655 66,536
 Income tax payable 318 302 128
 Derivative liabilities 371
 Warrant liability 26
 Total current liabilities   1,025,438 970,771 1,086,984
 Convertible notes payable-non-current
 Long-term borrowings 30,328 31,057
 Deferred revenue 33,305 32,566 28,366
 Warranty 28,704 28,114 38,870
 Deferred subsidies and other 21,267 20,943 22,203
 Other long-term liabilities 1,139 939 15
 Total liabilities   1,140,181 1,084,390 1,176,438
 Shareholders’ equity 
   Common shares 476,658 476,658 477,171
   Additional paid-in capital 8,569 8,420 7,994
   Accumulated loss (524,665) (493,215) (424,020)
   Accumulated other comprehensive income 53,385 50,068 51,163
 Total equity attribute to ReneSola Ltd  13,947 41,931 112,308
 Noncontrolling interest 798
 Total  shareholders’ equity  14,745 41,931 112,308
 Total liabilities and shareholders’ equity   1,154,926 1,126,321 1,288,746

View Table Fullscreen

RENESOLA LTD
 Unaudited Consolidated Statements of Income
 (US dollar in thousands, except ADS and share data)
 Three Months Ended  Six Months Ended
 Jun 30, 2017  Mar 31, 2017  Jun 30, 2016 Jun 30, 2017 Jun 30, 2016
 Net revenues from third parties 151,632 148,267 250,038 299,899 510,734
 Net revenues from related parties 8,343 8,343 0
  Total net revenues  151,632 156,610 250,038 308,242 510,734
 Cost of revenues   (147,509) (154,889) (208,886) (302,398) (425,077)
 Gross profit  4,123 1,721 41,152 5,844 85,657
 GP%  2.72% 1.10% 16.50% 1.9% 16.8%
 Operating (expenses) income:
 Sales and marketing (11,753) (3,776) (15,152) (15,529) (28,652)
 General and administrative (12,649) (12,450) (13,525) (25,099) (26,794)
 Research and development (5,352) (5,707) (7,424) (11,059) (15,614)
 Other operating income 5,250 2,458 1,324 7,708 4,018
 Total operating expenses   (24,504) (19,475) (34,777) (43,979) (67,042)
 Income (loss) from operations   (20,381) (17,754) 6,375 (38,135) 18,615
-13.40% -6.30% 2.50% -12.37% 3.64%
Non-operating (expenses) income:
 Interest income 378 312 715 690 1,492
 Interest expense (8,571) (9,248) (8,477) (17,819) (18,337)
 Foreign exchange gains (losses) (78) 161 4,336 83 7,281
 Gains (losses) on derivatives, net (411) (332) 2,869 (743) 2,267
Investment gain on disposal of subsidiaries 0 7
Gains on repurchase of convertible bonds 0 213
 Fair value change of warrant liability 131 0 551
 Income (loss) before income tax,
noncontrolling interests 
(29,063) (26,861) 5,949 (55,924) 12,089
 Income tax (expense) benefit (2,396) 3,621 (425) 1,225 (832)
 Net income (loss)  (31,459) (23,240) 5,524 (54,699) 11,257
 Less: Net income (loss) attributed to
noncontrolling interests
(9) 0 0 (9) 0
 Net income (loss) attributed to
holders of ordinary shares 
(31,450) (23,240) 5,524 (54,690) 11,257
 Earnings per share
   Basic (0.16) (0.12) 0.03 (0.27) 0.06
   Diluted (0.16) (0.12) 0.03 (0.27) 0.06
 Earnings per ADS
   Basic (1.57) (1.16) 0.27 (2.73) 0.56
   Diluted (1.57) (1.16) 0.27 (2.73) 0.56
Weighted average number of shares used in computing loss per share
Basic 200,538,902 200,538,902 201,998,340 200,538,902 202,580,825
Diluted 200,538,902 200,538,902 201,998,340 200,538,902 202,580,825
RENESOLA LTD
Unaudited Consolidated Statements of Comprehensive Income (loss)
(US dollar in thousands)
 Three Months Ended  Six Months Ended 
 Jun 30, 2017  Mar 31, 2017  Jun 30, 2016 Jun 30, 2017 Jun 30, 2016
 Net income (loss)  (31,459) (23,240) 5,524 (54,699) 11,257
 Other comprehensive income (loss) 
 Foreign exchange translation adjustment 3,317 (1,165) (7,921) 2,152 (10,414)
 Other comprehensive income (loss) 3,317 (1,165) (7,921) 2,152 (10,414)
 Comprehensive income (loss)  (28,142) (24,405) (2,397) (52,547) 843
 Less:comprehensive loss attributable to non-controlling interest (9) (9) 0
 Comprehensive income (loss) attributable to ReneSola  (28,133) (24,405) (2,397) (52,538) 843
 RENESOLA LTD
 Unaudited Consolidated Statements of Cash Flow
 (US dollar in thousands)
 Six Months Ended 
Jun 30, 2017 Jun 30, 2016
 Operating activities: 
 Net profit/(loss) (54,690) 11,257
 Adjustment to reconcile net loss to net cash provided by (used in) operating activity: 
   Inventory write-down 4,032
   Depreciation and amortization 38,766 39,275
   Amortization of deferred convertible bond issuances costs and premium 33
   Allowance of doubtful receivables, advance to suppliers and prepayment for
purchases of property, plant and equipment
1,570 131
   Gain (loss) on derivatives 743 (2,088)
   Fair value change of warrant liability (551)
   Gain from settlement of certain payables
   Gain from advances from customers
   Share-based compensation 339 512
   Gain (loss) on disposal of long-lived assets (3,087) 5,358
   Gain on disposal of solar project (2,527)
   Impairment of goodwill
   Impairment of Intangible assets
   Impairment of  long-lived assets
   Reversal of firm purchase commitment
   Gain on disposal of  subsidiaries
 Gain on CB repurchase (212)
 Changes in assets and liabilities: 
   Accounts receivable 114 (29,480)
   Inventories 2,008 1,119
   Project assets and deferred project cost (64,395) (25,676)
   Advances to suppliers (283) (6,354)
   Amounts due from related parties 119 257
   Value added tax recoverable (4,342) 18,668
   Prepaid expenses and other assets 7,464 6,658
   Prepaid land use rights, net 1,342 464
   Accounts payable (26,413) (12,643)
   Advances from customers 63,261 (8,198)
   Income tax payable (51) (778)
   Other  current liabilities 2,099 (10,050)
   Deferred revenue (4,010)
   Other non-current assets (458)
   Other long-term assets
   Warranty (7,002) 3,821
   Deferred taxes assets (468) 1,959
   Other long-term liabilities 249
 Net cash provided by (used in) operating activities  (38,625) (13,513)
 Investing activities: 
   Purchases of property, plant and equipment (22,750) (4,162)
   Advances for purchases of property, plant and equipment (5,368) 5,140
   Cash received from government subsidy
 Proceeds from disposal of property, plant and equipment 74
 Advance from disposal of property, plant and equipment 2,916
   Changes in restricted cash (12,248) (2,895)
 Cash consideration for investment, net of cash received (885)
   Net cash received (paid) on settlement of  derivatives (621) 179
   Purchases of investment securities
   Proceeds from disposal of subsidiaries
 Net  cash provided by (used in) investing activities  (38,882) (1,738)
 Financing activities: 
   Proceeds from bank borrowings 473,657 497,630
   Proceeds from related parties 4,374
   Repayment of bank borrowings (412,199) (464,338)
   Proceeds from exercise of stock options
 Paid for CB repurchase
   Share issuance costs
   Repurchace from noncontrolling interests 798
   Repurchase of convertible notes (25,931)
 Cash paid for ADS/s repurchase (981)
 Net cash provided  by (used in) financing activities  66,630 6,380
 Effect of exchange rate changes 2,174 (5,451)
 Net increase (decrease) in cash and cash equivalents (8,703) (14,322)
 Cash and cash equivalents, beginning of period/year 37,336 38,045
 Cash and cash equivalents, end of period/year  28,633 23,723

Source: ReneSola Ltd.
Anand Gupta Editor - EQ Int'l Media Network

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