UPDATE: "Cowen’s Stone Reiterates OUTPERFORM on Trina Solar" (TSL)
In premarket trading the stock is down 4.7% at $16.83. S&P futures are indicating a 2% decline at the open.
In early 2008 I was asked why we were doing more posts on financial stocks and the general market.
I hope the last couple years have answered that question.
It looks as though both analysts were right in yesterday's "Auriga Lowers Price Target and Estimates on Trina Solar" But Collins Stewart looks for decent numbers on the 25th (TSL).
One point to note, from the press release:
...Earnings per fully diluted ADS were $0.66. The negative impact of first quarter net foreign currency exchange loss was approximately $0.21 per fully diluted ADS....From Reuters:
Here's the press release, foreign currency loss was $14.5 mil:
* Rev beats Street
* Sees shipments improving through the year
* Q1 shipments quadruple, sees higher Q2 shipments
May 25 (Reuters) - China-based Trina Solar Ltd (TSL.N) reported better-than-expected first-quarter results, as shipments nearly quadrupled, and the company expects demand to improve through the year.
"As a result of increasing demand visibility for its module products in both its European and non-European markets, the company expects to increase its shipment volumes on a quarter to quarter basis through the end of 2010," Trina said.
Trina currently expects to ship between 200 megawatts (MW) and 205 MW of photovoltaic modules in the second quarter, up from 192.6 MW in the latest first quarter.
For the first quarter ended March 31, the company earned 44.5 million, or 66 cents per American Depositary Share (ADS), compared with a loss of $11 million, or 22 cents per ADS, last year....MORE
Trina Solar Announces First Quarter 2010 Results
CHANGZHOU, China, May 25, 2010 /PRNewswire via COMTEX/ --Trina Solar Limited (NYSE: TSL) ("Trina Solar" or the "Company"), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, announced today its financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Financial and Operating Highlights
-- Solar module shipments were approximately 193 MW, compared to the
Company's previous guidance of 180 MW to 190 MW, representing an
increase of 17.9% sequentially and 295.5% year-over-year
-- Net revenues were $336.8 million, an increase of 7.5% sequentially and
-- Gross margin was 30.9%, above the Company's guidance of 26% to 28%,
compared to 32.6% in the fourth quarter of 2009 and 17.2% in the first
quarter of 2009
-- Operating income and operating margin were $76.0 million and 22.6%,
respectively, compared to $64.4 million and 20.6%, respectively, in the
fourth quarter of 2009
-- Net income was $44.5 million, which includes a net foreign currency
exchange loss of $14.5 million, compared to $48.8 million in the fourth
quarter of 2009
-- Earnings per fully diluted ADS were $0.66, which includes impact of a
net foreign currency exchange loss of $0.21 per fully diluted ADS,
compared to $0.74 in the fourth quarter of 2009
"We are very pleased to deliver another quarter of record shipments and strong operating margins for the first three months of 2010, thanks to effective management and relentless execution," said Mr. Jifan Gao, Chairman and CEO of Trina Solar. "In line with our clear strategic objectives, we continued to increase shipments and strategic customer contracts to a growing portfolio of diversified PV end-markets, including the United States and Australia, while further consolidating our position in Europe with the inauguration of our European headquarters in Zurich."
"We have also maintained our strong focus on innovative technology development, and are excited to announce a range of new high quality products this quarter. These included three new product lines featuring our high efficiency square mono cell technology (Quad Max cell technology), an aesthetically appealing black module design series to target the growing residential and small business market, and a large, high-wattage module line suitable for commercial and industrial installations and utility-scale solar projects."
"We continue to enhance Trina Solar's global brand visibility with our recently announced sponsorship of world-class Formula One team, Renault, highlighting the increasing use of solar technology applications within this high profile sport. We believe this partnership may further inspire the development and widespread adoption of renewable energy technologies and solutions for the commercial automotive industry, and demonstrates our commitment to helping create a greener environment."
"Finally, with regard to current macroeconomic concerns involving the European markets and the Euro, we are still seeing strong demand for our products, and that our shipment flow to customers has not been negatively affected by credit availability or other related factors. We continue to expand and refine our internally-managed currency hedging program, which has been in place since the fourth quarter of 2008."
Recent Business Highlights
During the first quarter of 2010, the Company
-- Announced its selection by China's Ministry of Science and Technology
to establish a research and development centre for PV technology
-- Announced the establishment of its EU regional headquarters in Zurich,
-- Raised approximately $184 million through the successful follow-on
public offering in March 2010 of 9,085,000 ADSs, each representing 50
ordinary shares of the Company. The Company is using the net proceeds
to expand manufacturing facilities for the production of PV cells and
modules, for research and development purposes, including the expansion
of its research and development center, and for downstream projects and
general corporate purposes
-- Announced a sales agreement to supply U.S. wholesale distributor Essco
with approximately 25 MW of PV modules and an additional 4 MW at the
option of Essco, to be delivered during 2010
-- Announced initial shipments made to RF Industries Pty Ltd, Australia's
leading renewable energy distributor
-- Changed the ratio of its ordinary shares to ADSs from one hundred (100)
ordinary shares to one ADS to fifty (50) ordinary shares to one ADS,
which resulted in the same effect as a two-for-one ADS split. As a
result, the EPS figures for all prior periods have been adjusted to
reflect this ADS ratio change
Subsequent to the first quarter of 2010, the Company
-- Partnered with one of the largest and most experienced global renewable
energy developers, Enfinity NV ("Enfinity"), to cover the roofs of the
Belgian-European Pavilion and the Theme Pavilion at the 2010 Shanghai
World Expo with the Company's modules
-- Introduced new product lines, including a 'Design Series' black solar
module and a Utility Scale Solar module, unveiled at Solarexpo 2010 in
Verona, Italy, and a premium branded square mono cell module (Quad MAX
technology) to be showcased at InterSolar 2010 in Munich, Germany
First Quarter 2010 Results
Trina Solar's net revenues in the first quarter of 2010 were $336.8 million, an increase of 7.5% sequentially and an increase of 155.0% year-over-year. Total shipments were 192.6 MW, compared to the Company's previous guidance of 180 MW to 190 MW, versus 163.7 MW in the fourth quarter of 2009 and 48.8 MW in the first quarter of 2009. The sequential increase in total shipments was primarily due to increased demand in European markets, due, in part to increased brand recognition for our products in new and established PV markets, combined with increased demand to install new PV systems ahead of mid-year feed-in tariff adjustments in Germany.
Gross Profit and Margin
Gross profit in the first quarter of 2010 was $104.2 million, compared to $102.2 million in the fourth quarter of 2009 and $22.7 million in the first quarter of 2009. Gross margin was 30.9% in the first quarter of 2010, compared to the Company's previous guidance of 26% to 28%, which was primarily due to lower average silicon purchase prices. The gross margin was 32.6% in the fourth quarter of 2009 and 17.2% in the first quarter of 2009. The year-over-year increase in gross margin was primarily due to the Company's favorable reduction of its silicon purchase price and non-silicon manufacturing costs relative to module ASP decline. The Company continued its focus efforts to reduce its manufacturing cost per watt through ongoing efficiency gains linked to its lean manufacturing initiatives and improved supply chain management.
Operating Expense, Income and Margin
Operating expenses in the first quarter of 2010 were $28.2 million, a decrease of 25.2% sequentially and an increase of 77.9% year-over-year. The sequential decrease was primarily due to a $6.0 million doubtful receivables write-off in the fourth quarter of 2009, while the yearly increase was primarily due to the growth in shipments and expansion in the Company's global sales and marketing efforts. The Company's operating expenses represented 8.4% of its first quarter net revenues, a decrease from 12.1% in the fourth quarter of 2009 and 12.0% in the first quarter of 2009. Operating expenses in the first quarter of 2010 also include $1.0 million in share-based compensation expenses, compared to $1.2 million in the fourth quarter of 2009 and $1.0 million in the first quarter of 2009.
As a result of the foregoing, operating income in the first quarter of 2010 was $76.0 million, compared to $64.4 million in the fourth quarter of 2009 and $6.8 million in the first quarter of 2009. Operating margin was 22.6% in the first quarter of 2010 compared to 20.6% in the fourth quarter of 2009 and 5.2% in the first quarter of 2009.
Net Interest Expense
Net interest expense in the first quarter of 2010 was $9.0 million, compared to $7.3 million in the fourth quarter of 2009 and $5.7 million in the first quarter of 2009. The sequential and year-over-year increases were due to additional bank borrowings to support the Company's announced capacity expansion.
Foreign Currency Exchange
The Company had a loss in foreign currency exchange of $14.5 million in the first quarter of 2010, which was net of a gain in fair value of derivative instruments of approximately $13.0 million. This compares to a net loss of $2.6 million in the fourth quarter of 2009 and a net loss of $7.5 million in the first quarter of 2009. This net loss was primarily due to the depreciation of the Euro against the U.S. dollar in the first quarter which was partially offset by the gain from foreign currency forward contracts used by the Company to hedge its foreign currency risk exposure.
The Company continued foreign currency hedging during the first quarter of 2010 using foreign currency forward contracts between the Euro and the U.S. dollar, with the goal of mitigating, to some extent, the effects of exchange rate volatility.
Net Income and EPS
Net income was $44.5 million in the first quarter of 2010, compared to a net income of $48.8 million in the fourth quarter of 2009 and a $11.0 million loss in the first quarter of 2009. The net foreign currency exchange loss included in net income was $14.5 million, compared to a net foreign currency exchange loss of $2.6 million and a net foreign currency exchange loss of $7.5 million in the fourth quarter and first quarter of 2009, respectively.
Net margin was 13.2% in the first quarter of 2010, compared to 15.6% in the fourth quarter of 2009 and negative 8.0% in the first quarter of 2009.
Earnings per fully diluted ADS were $0.66. The negative impact of first quarter net foreign currency exchange loss was approximately $0.21 per fully diluted ADS.
As of March 31, 2010, the Company had $690.5 million in cash and cash equivalents and restricted cash, which includes the net proceeds of its recent follow-on offering. The Company's working capital balance was $728.9 million. Total bank borrowings stood at $518.0 million, of which $296.1 million were long-term borrowings. The Company reduced its short-term borrowings by $45.5 million to approximately $221.9 million in the first quarter.
Shareholders' equity was $898.8 million, an increase from $679.3 million at the end of the fourth quarter of 2009.
Second Quarter and Full Year 2010 Guidance
For the second quarter of 2010, the Company expects to ship between 200 MW to 205 MW of PV modules. The Company currently believes its gross margin for the second quarter will be in the high 20s in percentage terms. Such guidance is based on the current exchange rate between the Euro and U.S. dollar.
For the full year of 2010, the Company reiterates its guidance for total PV module shipments between 750 MW to 800 MW, representing an increase of 88% to 100% from 2009.
Operations and Business Outlook
Non-Silicon Cost Reduction
In the first quarter of 2010, the Company's non-silicon manufacturing cost for its in-house core raw materials to module production was approximately $0.76 per watt, a sequential reduction of $0.02. By the year end of 2010, the Company expects further reduction to reach approximately $0.70 through the continuation of technology and manufacturing process improvements, including supply chain and logistics management initiatives currently under testing or development.
Through the Company's diversified range 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.
As a result of increasing demand visibility for its module products in both its European and non-European markets, the Company expects to increase its shipment volumes on a quarter to quarter basis through the end of 2010. Additionally, the Company expects to increase its percentage of global shipments to the United States in the second half of 2010.
Through yield increases achieved from improved cell conversion efficiency rates, improved production efficiencies and manufacturing line enhancements, the Company has increased its annualized in-house production capacities of ingot and wafer as well as PV cells and modules to approximately 600 MW and 750 MW respectively as of March 2010. The Company expects to expand its annualized cell and module production capacity to reach up to 950 MW by the third quarter of 2010.
The Company will host a conference call at 8:00 a.m. ET on May 25, 2010, to discuss the results for the quarter ended March 31, 2010. Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Terry Wang, Chief Financial Officer, Sean Tzou, Chief Operating Officer, and Thomas Young, Senior Director of Investor Relations. Supplemental information will be made available on the Investors Section of Trina Solar's website at http://www.trinasolar.com . 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 7260-0212.
If you are unable to participate in the call at this time, a replay will be available on May 25 at 10:00 a.m. ET, through June 8, at 11:59 p.m. ET. To access the replay, dial 1 (800) 642-1687, international callers should dial +1 (706) 645-9291, and enter the conference 7260-0212.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar's website at http://www.trinasolar.com . To listen to the live webcast, please go to Trina 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 Trina Solar's website for 90 days....