ReneSola Delivers More Bad News

Solar panel installation on roof of Wallmart
Solar panel installation on roof of Wallmart

ReneSola Ltd. (NYSE: SOL) reported third-quarter 2012 results before markets opened this morning. The solar PV maker reported a diluted per-share loss of $0.46 on revenues of $218.2 million. In the same period a year ago, ReneSola reported a net loss of $0.05 per share on revenue of $233 million. This morning's results also compare to the Thomson Reuters consensus estimates for a net loss of $0.31 per share and $215.8 million in revenue.

The loss per American Depositary Share (ADS) totaled $0.91. One ADS equals two ordinary shares.

The company's CEO said:

While we delivered record shipments in the third quarter, declining selling prices and the substantial supply-demand imbalance continued to have a large impact on our margins. Nevertheless, we continued to drive down costs and improve efficiency through strong management and a dedicated R&D team.

About those margins: gross margins in the third quarter were negative 18%, compared with a negative margin of 4% in the third quarter of 2011 and 0.6% in the second quarter of this year. ReneSola attributed the collapse to an inventory writedown of $31.6 million "to reflect the decline in the price of solar wafers and polysilicon."

The company's guidance for the fourth quarter includes total shipments of 635 to 675 megawatts, of which about 250 to 270 megawatts will be panel shipments. Revenue is expected to come in at $240 million to $260 million, and the company forecasts a positive gross margin for the quarter. The consensus analyst estimates for the quarter call for a net loss of $0.27 per share on revenues of $288.6 million.

There is really not much to new to say about solar makers. Manufacturing capacity is still underutilized, prices continue to fall and more countries are cutting or eliminating subsidies. About the only place a solar firm can make any money at all is in China, where the government has committed to installing thousands of megawatts of solar generation.

ReneSola's shares are inactive in premarket trading this morning, having closed at $1.18 last night, in a 52-week range of $1.08 to $3.38. Thomson Reuters had a consensus analyst price target of around $1.90 before today's results were announced.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Alternative Energy, Earnings, Green Biz, Technology Companies Tagged: SOL