|
Suntech Reports Second Quarter 2008 Financial Results; Second quarter 2008 total net revenues grew 51.3% year-over-year to
$480.2 million
SAN FRANCISCO and WUXI, China, Aug. 20 2008 -- Suntech Power Holdings Co., Ltd. (NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV) cells and modules, today announced second quarter 2008 financial results.
Second Quarter 2008 Highlights(1)
-- Second quarter 2008 total net revenues grew 51.3%
year-over-year to
$480.2 million.
-- Consolidated gross margin increased to 24.1% for the second
quarter
2008 compared to 20.3% for the second quarter 2007.
Non-GAAP(2) gross
margin reached 24.7% for the second quarter 2008, compared
with 21.1%
for the second quarter 2007.
-- Net income for the second quarter 2008 was $65.2 million or
$0.38 per
diluted American Depository Share (ADS). On a non-GAAP
basis,
Suntech's net income for the second quarter 2008 was $71.3
million or
$0.41 per diluted ADS. Each ADS represents one ordinary
share.
-- Suntech's PV cell production capacity was 660MW at the end of
the
second quarter 2008. The Company is on track to reach 1GW PV
cell
production capacity by the end of 2008.
-- Due to robust demand coupled with strong execution, Suntech
has raised
full year 2008 revenue guidance from a range of $1.9 billion
to $2.1
billion to a range of $2.05 billion to $2.15 billion.
Suntech also
increased full year 2008 PV product shipment target from
530MW to
approximately 550MW.
"A healthy demand environment and smooth execution led to strong
revenue growth in the second quarter," said Dr. Zhengrong Shi,
Suntech's Chairman and CEO. "We are fully booked for the second half
of 2008 and expect these excellent demand conditions to continue
through 2009. As it stands, we have already signed over 200MW of
fixed price, fixed volume sales contracts with strong pricing for
2009. We are also in the process of finalizing approximately 500MW
of additional sales contracts, which we expect to complete by the
end of the third quarter."
"We also made great strides in silicon
procurement during the second quarter. We made a strategic
investment in Shunda, finalized investments in Nitol and Glory
Silicon, and recently entered into long-term contracts with
Wacker-SCHOTT, Crystalox, and ReneSola. We have built a diverse
family of silicon suppliers that we believe will lead to greater
supply stability and enhance our long term cost competitiveness
through a steep declining cost curve. Due to these agreements, we
have now secured 900MW of attractively priced silicon for 2009."
Commenting on Suntech's new technology
initiatives, Dr. Shi said, "Our high efficiency Pluto technology is
performing well in evaluation stage. We are on track to have one
30MW Pluto production line fully operational by the end of 2008, and
roll out further lines in 2009. In addition, the construction of our
thin film plant is progressing smoothly and we expect to initiate
trial production by the end of this year. These initiatives will
both broaden Suntech's product portfolio and further differentiate
Suntech as a technology leader."
Recent Business Highlights
Silicon Procurement and Investment
-- Suntech finalized an 18%
investment in Glory Silicon and signed a
four-year silicon wafer supply contract with Glory Silicon
from 2009 to
2012.
-- Suntech signed an agreement with ReneSola to purchase
approximately
1.5GW of silicon wafers over a nine-year period beginning in
2008. In
October 2007, Suntech and ReneSola signed a four-year
contract for the
supply of 510MW of silicon wafers. The new contract provides
for
additional supply of silicon wafers to Suntech in 2008 and
replaces the
remaining term of silicon wafers originally contracted for
2009-2011.
-- Suntech recently completed the final round of its $100
million in
aggregate purchase of a minority interest in Nitol Solar.
Suntech has
received initial batches of polysilicon from Nitol Solar and
is pleased
with the test results. This coincides with the recently
announced $50
million equity investment in and $25 million loan to Nitol
Solar from
IFC (International Finance Corporation), a member of the
World Bank
Group.
-- Suntech signed an initial six-year silicon wafer supply
agreement with
PV Crystalox Solar of Oxfordshire, England, for predetermined
prices
and volumes. Under this agreement, PV Crystalox Solar will
supply
Suntech with a total of 260MW of silicon wafers from 2008 to
2013.
-- Suntech signed a long-term silicon wafer supply agreement
with WACKER
SCHOTT Solar GmbH, a joint venture of Wacker Chemie AG and
SCHOTT Solar
GmbH under which WACKER SCHOTT will supply Suntech specified
annual
volumes of silicon wafers with a total volume of
approximately 220MW
over the course of the contract.
-- In May 2008, Suntech acquired a minority stake in Shunda
Holdings Co.
Ltd, a manufacturer of solar wafers based in China, for a
total
consideration of $101.9 million. In addition, Suntech had
entered into
a thirteen-year silicon wafer supply agreement with a
subsidiary of
Shunda Holdings Co. Ltd. Under the terms of the agreement,
Shunda will
supply Suntech specified annual volumes of silicon wafers
with a total
volume of approximately 7GW from 2008 to 2020.
Products and Projects
-- Suntech introduced its Just Roof(TM), Light Thru(TM) and
QuikSnap
building integrated PV (BIPV) products from its MSK Solar
Design
Line(TM) to the European market at the Intersolar Technology
Trade Fair
2008 held in Munich, Germany.
-- Suntech signed a two-year agreement with Enel.si, a
subsidiary of Enel,
Italy's largest power utility. Under the agreement, Suntech
will supply
30MW of PV modules to Enel.si in late 2008 and 2009.
Capacity Expansion
-- Suntech added 120MW of PV cell capacity to reach 660MW
installed
capacity in the second quarter. Suntech is on track to reach
1GW by the
end of 2008, 1.4GW by year end 2009 and 2GW by year end 2010.
Acquisition
-- In June 2008, Suntech closed the transaction to acquire the
remaining
one-third equity interest in MSK Corporation for 1,310,328
Suntech
shares in a share exchange pursuant to the relevant
acquisition
agreements. Suntech acquired a two-thirds equity interest in
MSK
Corporation in August 2006.
Industry Recognition
-- Dr. Shi was named the winner of the Banksia International
Award in
recognition of his outstanding contributions to environmental
protection initiatives and environmental awareness. The
award is the
highest accolade Australia confers to an individual for
environmental
achievement in the global arena.
Second Quarter 2008 Results
Net
% of Net Non-GAAP Non-GAAP
Revenues Revenues
Gross Gross
Profit Margin
(in $ (in
$ (%)
millions) millions)
Standard PV Modules $447.2 93.1%
$111.1 24.8%
Others 33.0 6.9%
7.3 22.1%
Total Net Revenues $480.2 100%
$118.4 24.7%
Total net revenues for the second
quarter of 2008 were $480.2 million, representing an increase of
51.3% from the corresponding period in 2007.
Non-GAAP gross profit for the second
quarter of 2008 was $118.4 million, an increase of 76.8%
year-over-year. Non-GAAP gross margin for the Company's standard PV
module business was 24.8% and non-GAAP consolidated gross margin was
24.7%. Gross margin increased from the second quarter of 2007
primarily due to an increase in the average selling price driven by
strong demand for Suntech's solar products coupled with appreciation
of the Euro versus the USD.
Non-GAAP operating expenses in the
second quarter of 2008 totaled $33.9 million or 7.1% of total net
revenues. Operating expenses increased from the first quarter of
2008 primarily due to additional administrative expenses incurred at
the newly acquired KSL-Kuttler Automation Systems GmbH.
Non-GAAP income from operations for the
second quarter of 2008 was $84.4 million, an increase of 73.1%
year-over-year. Non-GAAP operating margin was 17.6%.
Net interest expense was $5.2 million in
the second quarter of 2008 compared to net interest expense of $4.0
million in the first quarter of 2008. The sequential increase in net
interest expense was primarily due to an increase of interest
expenses associated with the $575 million convertible notes offering
in March 2008 and the increased short-term borrowing balance.
Net other expenses increased from $0.8
million in the first quarter of 2008 to $6.3 million in the second
quarter of 2008. The increase was mainly due to the mark-to-market
valuation losses associated with foreign currency derivative
instruments.
Foreign currency exchange gain was $2.5
million in the second quarter of 2008 compared to a foreign currency
exchange gain of $2.9 million in the first quarter of 2008. The
foreign currency exchange gain in the second quarter of 2008 was
primarily due to the appreciation of the CNY and Euro versus the USD
coupled with an increase in Euro-denominated sales.
Non-GAAP net income for the second
quarter of 2008 increased 46.0% year-over-year to $71.3 million, or
$0.41 per non-GAAP diluted ADS.
On a GAAP basis, for the second quarter
of 2008 gross profit was $115.8 million, an increase of 80.0%
year-over-year. Gross margin for the standard PV module business was
24.5% and consolidated gross margin was 24.1% for the second quarter
of 2008.
On a GAAP basis, operating expenses for
the second quarter of 2008 were $38.4 million or 8.0% of total net
revenues. Income from operations was $77.4 million for the second
quarter of 2008, an increase of 87.4% year-over-year. Operating
margin was 16.1%. Net income increased 57.9% year-over-year to $65.2
million, or $0.38 per diluted ADS.
In the second quarter of 2008, capital
expenditures, which were primarily related to production capacity
expansion and the construction of Suntech's new production
facilities, totaled $73.2 million and depreciation and amortization
expenses totaled $9.8 million.
As of June 30, 2008, Suntech had cash
and cash equivalents of $605.2 million, compared to $1,020.3 million
as of March 31, 2008. The decrease of cash and cash equivalents was
mainly due to cash payments for investments in upstream strategic
partners, long-term prepayments to suppliers and capital
expenditures for plant capacity expansions. Inventory totaled $182.6
million as of June 30, 2008 compared to $178.3 million as of March
31, 2008. Accounts receivable decreased from $271.4 million as of
March 31, 2008 to $218.9 million as of June 30, 2008. Days sales
outstanding decreased from 57 days in the first quarter of 2008 to
41 days in the second quarter of 2008.
Business Outlook
Based on current operating conditions,
Suntech expects revenues for the third quarter of 2008 to be in the
range of $570 million to $580 million. GAAP consolidated gross
margin in the third quarter of 2008 is expected to be in the range
of 22% to 23%.
Due to robust demand coupled with strong
execution, Suntech has raised full year 2008 revenue guidance from a
range of $1.9 billion to $2.1 billion to a range of $2.05 billion to
$2.15 billion. Suntech also increased full year 2008 PV product
shipment target from 530MW to approximately 550MW. Suntech targets
to reach 1GW of installed PV cell production capacity by year-end
2008.
Changes to the Board
Suntech announced the resignation of Mr.
Songyi Zhang from its Board of Directors after two and a half years
of service.
"Mr. Zhang played an integral role in
guiding Suntech to our current world leading position in the solar
industry and we are very grateful for his contribution. We wish him
all the best in his future endeavors," said Dr. Shi.
Senior Management Hires
Mr. Graham Artes, formerly Chief
Operations Officer of Suntech, has assumed the roles of Managing
Director of KSL-Kuttler and Suntech Corporate Vice President of
Engineering. Mr. Artes joined Suntech in September 2005 and has over
30 years of experience in production and operations management in
the United Kingdom, Germany and China.
Mr. Johnson Chiang joined Suntech to
assume Mr. Artes' former role as Chief Operating Officer with
responsibility for all aspects of manufacturing management. Prior to
joining Suntech, Mr. Chiang worked in business development,
manufacturing and supply chain management, and worldwide operations
for Foxconn Technology Group and Solectron Corporation. Mr. Chiang
holds a master's degree in industrial engineering from the
University of Texas, an MBA from Santa Clara University in
California and a bachelor's degree in industrial engineering from
Chung-Yuan University in Taiwan.
Mr. Robin Chen has been appointed
General Manager of Suntech to oversee all aspects of the Company's
thin film plant being constructed in Shanghai. Prior to joining
Suntech, Mr. Chen managed manufacturing operations for Parlex
Corporation, a Johnson Electric company. He brings more than 20
years of management experience in manufacturing operations, supply
chain management and strategic planning. Mr. Chen holds an MBA from
Henley Management College in the U.K. and a bachelor's degree in
automotive engineering from Tsing Hua University in Beijing.
Mr. Frank Zhang, former General Manager
of Suntech's Shanghai thin film plant, has left Suntech for personal
reasons.
Mr. Philip Yue has been appointed Vice
President of Value Chain Development for Suntech. Mr. Yue brings
over a decade of experience in enterprise markets, outsourcing
services, manufacturing, IT recruitment, and contracting from large
global companies including Atos Origin, Manpower Inc. and LECCO
Consultants Limited (subsequently The QUESCO Group). Mr. Yue holds
an MBA from University of East Asia, Macau and a Bachelor of Science
degree from University of London.
Second Quarter 2008 Conference Call
Information
Suntech management will host a
conference call on August 20, 2008 at 8:00 a.m. Eastern Time (which
corresponds to 8:00 p.m. Beijing/Hong Kong Time and 1 p.m. British
Summer Time) to discuss the Company's results.
To access the conference call, please
dial +1-617-614-3473 (for U.S. callers) or +852-3002-1672 (for
international callers) and ask to be connected to the Suntech
earnings conference call. A live and archived webcast of the
conference call will be available on Suntech's website at
http://www.suntech-power.com under Investor Center: Financial
Events.
A telephonic replay of the conference
call will be available until September 3, 2008 by dialing
+1-617-801-6888 (passcode: 15303898).
About Suntech
Suntech Power Holdings Co., Ltd. is a
world leading solar energy company as measured by both production
output and capacity of solar cells and modules. Suntech is
passionate about improving the environment we live in and dedicated
to developing advanced solar solutions that enable sustainable
development. Suntech designs, develops, manufactures, and markets a
variety of high quality, cost effective and environmentally friendly
solar products for electric power applications in the residential,
commercial, industrial, and public utility sectors. Suntech offers
one of the broadest ranges of building integrated photovoltaic
(BIPV) products under the MSK Solar Design Line(TM). Suntech has
sales offices worldwide and is a market share leader in key global
solar markets. For more information, please visit
http://www.suntech-power.com .
Safe Harbor Statement
This press release contains
forward-looking statements. These statements 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. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar statements. In particular, the
projected third quarter and full year 2008 data regarding sales
volume, capacity, revenues, gross margin and the business outlook
and quotations from management in this announcement, as well as
Suntech's strategic and operational plans, are forward-looking
statements. Forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Further information
regarding these and other risks is included in Suntech's filings
with the U.S. Securities and Exchange Commission, including its
Annual Report on Form 20-F. Suntech does not undertake any
obligation to update any forward-looking statement as a result of
new information, future events or otherwise, except as required
under applicable law.
About Non-GAAP Financial Measures
To supplement its consolidated financial
results presented in accordance with GAAP, Suntech uses the
following non-GAAP measures which are adjusted from the most
directly comparable GAAP results to exclude items related to
share-based compensation, restructuring expenses and amortization
expenses incurred from the purchase price allocation effect related
to the MSK Corporation and KSL-Kuttler Automation Systems GmbH
acquisition. Suntech believes that non-GAAP information is useful
for analysts and investors to evaluate Suntech's future on-going
performance because they enable a more meaningful comparison of
Suntech's projected cash earnings and performance with its
historical results from prior periods. This information is not
intended to represent funds available for Suntech's discretionary
use and is not intended to represent or to be used as a substitute
for gross profit/margin, operating expenses, operating income or net
income as measured under GAAP. Many analysts covering Suntech use
the non-GAAP measures as well. These non-GAAP measures are not in
accordance with or an alternative for GAAP financial data, the
non-GAAP results should be reviewed together with the GAAP results
and are not intended to serve as a substitute for results under
GAAP, and may be different from non-GAAP measures used by other
companies. For more information on these non-GAAP financial
measures, please see the tables captioned "Reconciliations of
non-GAAP results of operations measures to the nearest comparable
GAAP measures" set forth at the end of this release and which shall
be read together with the accompanying financial statements prepared
under GAAP.
(1) Selected highlights of the
Company's second quarter 2008 results are
set forth in the text of the release and should be read
together with
the detailed financial statements at the end of this
release.
(2) All non-GAAP measures exclude share-based compensation
expenses,
restructuring expenses and amortization expenses incurred
from
purchase price allocation related to the acquisitions of MSK
Corporation and KSL-Kuttler Automation Systems GmbH. For
further
details on non-GAAP measures, please refer to the
reconciliation table
and a detailed discussion of management's use of non-GAAP
information
set forth in this press release.
Note: The quarterly consolidated income statements are
unaudited. The
condensed consolidated balance sheets are derived from Suntech's
unaudited consolidated financial statements.
SUNTECH POWER HOLDINGS CO., LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(In $'000)
As of
As of
March 31,
June 30,
2008 2008
ASSETS
Current assets:
Cash and cash equivalents 1,020,259
605,180
Restricted cash 97,646
115,712
Inventories 178,262
182,574
Accounts receivable 271,382
218,867
Value-added tax recoverable 108,650
143,034
Advances to suppliers
82,400 49,004
Short-term investments 67,854
147,594
Other current assets 82,896
112,992
Total current assets 1,909,349
1,574,957
Property, plant and equipment,
net 329,108 411,995
Intangible assets, net 107,076
157,633
Goodwill
33,973 75,355
Investments in affiliates --
123,363
Long-term prepayments 184,797
186,721
Long-term loan to a supplier
83,144 83,479
Amount due from related parties --
270,457
Other non-current assets 94,530
110,611
TOTAL ASSETS 2,741,977
2,994,571
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings, including
current portion of long-term bank
borrowings 442,612
556,071
Accounts payable
73,102 75,853
Other current liabilities 96,679
114,231
Total current liabilities 612,393
746,155
Long-term bank
borrowings 12,965 9,609
Convertible notes 1,075,000
1,075,000
Accrued warranty costs
27,074 32,599
Other long-term liabilities
31,026 47,844
Total liabilities 1,758,458
1,911,207
Minority
interest 18,335 6,351
Total shareholders'
equity 965,184 1,077,013
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 2,741,977
2,994,571
SUNTECH POWER
HOLDINGS CO., LTD.
CONSOLIDATED INCOME STATEMENTS
(In $'000, except share, per share, and per ADS data)
Three months Three months Three months
ended
ended ended
June 30, March 31,
June 30,
2007
2008 2008
Total net
revenues 317,377 434,514 480,179
Total cost of revenues 253,044
338,107 364,382
Gross
profit 64,333 96,407 115,797
Selling
expenses 6,961 15,273 14,751
General and administrative expenses 11,899
16,499 20,318
Research and development expenses 4,171
2,792 3,310
Total operating expenses 23,031
34,564 38,379
Income from
operations 41,302 61,843 77,418
Interest
expenses (6,005) (9,008) (13,866)
Interest income 8,811
5,041 8,653
Foreign exchange gain (loss) (2,120)
2,906 2,493
Other income (expense) 2,132
(803) (6,329)
Income before income
taxes 44,120 59,979 68,369
Tax provision (2,425)
(5,523) (3,517)
Net income after taxes before
minority interest and equity in
earnings of affiliates 41,695
54,456 64,852
Minority interest (515)
1,346 355
Equity in earnings of affiliates 123
-- --
Net
income 41,303 55,802
65,207
Net income per share and per ADS:
- Basic 0.27
0.36 0.42
- Diluted 0.25
0.33 0.38
Shares and ADSs used in
computation:
- Basic 151,143,225 153,124,488
153,935,960
- Diluted 168,862,744 173,770,151
185,244,933
Each ADS represents one ordinary share
Reconciliations of non-GAAP
results of operations measures to the
nearest comparable GAAP measures (*)
(in $ millions, except margin data, per share and per ADS data,
unaudited)
Three months ended June
30, 2007
Share- Effect of
based
Purchase Non-
GAAP Compen- Price
Restructuring GAAP
Results sation Allocation
Expenses Results
Gross profit 64.3 2.6 --
-- 66.9
Gross margin
20.3% 21.1%
Income from operations
41.3 7.1 0.4 -- 48.8
Income from operations margin
13.0% 15.4%
Net income attributable to holders
of ordinary shares 41.3 7.1 0.4
0.1 48.9
Net income margin
13.0% 15.4%
Net income per share and per ADS
-Basic
0.27 0.32
-Diluted
0.25 0.29
Three months ended March
31, 2008
Share- Effect of
based
Purchase Non-
GAAP Compen- Price
Restructuring GAAP
Results sation Allocation
Expenses Results
Gross profit
96.4 1.5 -- -- 97.9
Gross margin
22.2% 22.5%
Income from operations
61.8 4.3 0.8 -- 66.9
Income from operations margin
14.2% 15.4%
Net income
55.8 4.3 0.5 -- 60.6
Net income margin
12.8% 13.9%
Net income per share and per ADS
-Basic
0.36 0.40
-Diluted
0.33 0.35
Three months ended June
30, 2008
Share- Effect of
based
Purchase Non-
GAAP Compen- Price
Restructuring GAAP
Results sation Allocation
Expenses Results
Gross profit 115.8 1.5 1.1
-- 118.4
Gross margin
24.1% 24.7%
Income from operations
77.4 4.3 2.7 -- 84.4
Income from operations margin
16.1% 17.6%
Net income
65.2 4.3 1.8 -- 71.3
Net income margin
13.6% 14.9%
Net income per share and per ADS
-Basic
0.42 0.46
-Diluted
0.38 0.41
(*) The adjustment is for
share-based compensation, restructuring
expenses and the amortization expenses incurred from
purchase price
allocation related to the acquisitions of MSK Corporation
and
KSL-Kuttler Automation Systems GmbH.
For more information, please
contact:
In China:
Rory Macpherson
Investor Relations Director
Suntech Power Holdings Co., Ltd.
Tel: +86-21-6288-5574
Email:
rory@suntech-power.com
In the United States:
Sanjay M. Hurry
Vice President
The Piacente Group, Inc.
Tel: +1-212-481-2050
Email:
suntech@tpg-ir.com
InvestorIdeas.com Disclaimer: Issuers of press releases are solely responsible for the accuracy of the content.
Would you like to see your news and articles here? GO>>
|
