Yingli Green Energy Holding Company Limited, the global vertically integrated photovoltaic manufacturer, known as "Yingli Solar," announced on November 12th its unaudited consolidated financial results for the quarter ended September 30, 2013.
Third Quarter 2013 Consolidated Financial and Operating Summary
• Total net revenues were RMB 3,649.4 million (US$596.3 million).
• Total PV module shipments (including shipments for PV systems) increased by 5.1% from the second quarter of 2013.
• Overall gross profit was RMB 498.8 million (US$81.5 million), representing a gross margin of 13.7%.
• Operating loss was RMB 70.3 million (US$11.5 million), representing an operating margin of negative 1.9%.
• Net loss[1] was RMB 235.6 million (US$38.5 million) and loss per ordinary share and per American depositary share ("ADS") was RMB 1.50 (US$0.25). On an adjusted non-GAAP[2] basis, net loss was RMB 226.6 million (US$37.0 million) and loss per ordinary share and per ADS was RMB 1.45 (US$0.24).
[1] For convenience purposes, all references to "net loss/income" in this press release, unless otherwise specified, represent "net loss/income attributable to Yingli Green Energy" for all periods presented.
[2] All non-GAAP measures exclude, as applicable, share-based compensation, inventory provision, interest expenses consisting of changes in the fair value of the interest rate swap and the amortization of the debt discount, the amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Baoding Tianwei Yingli New Energy Resources Co., Ltd. ("Tianwei Yingli"), an operating subsidiary of the Company. For further details on non-GAAP measures, please refer to the reconciliation table and a detailed discussion of the Company's use of non-GAAP information set forth elsewhere in this press release.
Third Quarter 2013 Financial Results
Total Net Revenues
Total net revenues were RMB 3,649.4 million (US$596.3 million) in the third quarter of 2013, an increase of 8.0% from RMB 3,378.3 million in the second quarter of 2013 and up from RMB 2,237.0 million in the third quarter of 2012. Total PV module shipments (including shipments for PV systems) in the third quarter of 2013 increased by 5.1% from the second quarter of 2013. The sequential increase in net revenues from the second quarter of 2013 was mainly driven by the growth in total PV module shipments and stable average selling price in this quarter.
Gross Profit and Gross Margin
Gross profit was RMB 498.8 million (US$81.5 million) in the third quarter of 2013, representing a significant increase of 25.5% from RMB 397.5 million in the second quarter of 2013 and up from gross loss of RMB 507.8 million in the third quarter of 2012.
Overall gross margin was 13.7% in the third quarter of 2013, which improved from 11.8% in the second quarter of 2013 and compared to negative 22.7% in the third quarter of 2012.The sequential increase in gross margin in the third quarter of 2013 was primarily attributable to the stabilized average selling price of PV modules in this quarter and the Company's continuous efforts in reducing total manufacturing cost.
Operating Expenses
Operating expenses were RMB 569.1 million (US$93.0 million) in the third quarter of 2013, compared to RMB 526.7 million in the second quarter of 2013 and RMB 423.8 million in the third quarter of 2012. The slight increase in operating expenses quarter over quarter was mainly a result of increased research and development expenses and increased general and administration expenses, primarily as a result of provision for bad debts expenses incurred in this quarter.
Operating expenses as a percentage of total net revenues was 15.6% in the third quarter of 2013, which was at the same level as that in the second quarter of 2013 and compared to 18.9% in the third quarter of 2012.
Operating Loss and Margin
Operating loss was RMB 70.3 million (US$11.5 million) in the third quarter of 2013, a significant improvement from RMB 129.2 million in the second quarter of 2013 and RMB 931.5 million in the third quarter of 2012.
Operating margin was negative 1.9% in the third quarter of 2013, compared to negative 3.8% in the second quarter of 2013 and negative 41.6% in the third quarter of 2012.
Interest Expense
Interest expense was RMB 268.3 million (US$43.8 million) in the third quarter of 2013, compared to RMB 224.9 million in the second quarter of 2013 and RMB 256.0 million in the third quarter of 2012. As of September 30, 2013, the Company had an aggregate of RMB 15.7 billion (US$2.6 billion) of bank borrowings and medium-term notes, compared to RMB 17.2 billion as of June 30, 2013. The weighted average interest rate of the Company's borrowings was 6.29% in the third quarter of 2013, which increased slightly from 6.20% in the second quarter of 2013. The increase in interest expense was mainly due to the increased utilization of trade finance facilities and decreased capitalized interest expense in this quarter.
Foreign Currency Exchange Gain (Loss)
Foreign currency exchange gain was RMB 41.3 million (US$6.7 million) in the third quarter of 2013, compared to RMB 6.5 million in the second quarter of 2013 and RMB 52.1 million in the third quarter of 2012. Given that the Company had a net Euro-denominated monetary asset position, the foreign currency exchange gain was mainly due to the appreciation of the Euro against the RMB in this quarter.
Income Tax Expense (Benefit)
Income tax expense was RMB 23.0 million (US$3.8 million) in the third quarter of 2013, compared to income tax benefit of RMB 4.2 million in the second quarter of 2013 and income tax benefit of RMB 97.1 million in the third quarter of 2012. The income tax expense in this quarter mainly resulted from a valuation allowance for deferred income tax assets.
Net Loss
Net loss was RMB 235.6 million (US$38.5 million) in the third quarter of 2013, compared to RMB 320.8 million in the second quarter of 2013 and RMB 959.2 million in the third quarter of 2012. Loss per ordinary share and per ADS was RMB 1.50 (US$0.25) in the third quarter of 2013, compared to RMB 2.05 in the second quarter of 2013 and RMB 6.13 in the third quarter of 2012.
On an adjusted non-GAAP basis, net loss was RMB 226.6 million (US$37.0 million) in the third quarter of 2013, compared to RMB 321.5 million in the second quarter of 2013 and RMB 398.3 million in the third quarter of 2012. Adjusted non-GAAP loss per ordinary share and per ADS was RMB 1.45 (US$0.24) in the third quarter of 2013, compared to RMB 2.05 in the second quarter of 2013 and RMB 2.54 in the third quarter of 2012.
Balance Sheet Analysis
As of September 30, 2013, the Company had RMB 2,709.6 million (US$442.7 million) in cash and restricted cash, compared to RMB 3,627.4 million as of June 30, 2013. The change in cash and restricted cash was mainly a result of repayments and renewal of bank borrowings in this quarter.
As of September 30, 2013, accounts receivable were RMB 4,963.6 million (US$811.0 million), compared to RMB 4,435.2 million as of June 30, 2013. Days sales outstanding was 122 days in the third quarter of 2013, compared to 118 days in the second quarter of 2013.
As of September 30, 2013, accounts payable were RMB 4,958.3 million (US$810.2 million), compared to RMB 4,708.0 million as of June 30, 2013. Days payable outstanding was 142 days in the third quarter of 2013, which remained the same as in the second quarter of 2013.
As of September 30, 2013, inventories were RMB 2,861.2 million (US$467.5 million), compared to RMB 3,095.2 million as of June 30, 2013. Inventory turnover days was 82 days in the third quarter of 2013, which improved from 93 days in the second quarter of 2013.
As of the date of this press release, the Company had approximately RMB 6,853.6 million in unutilized short-term lines of credit and RMB 1,543.0 million committed long-term facility that can be drawn down in the near future.
Business Outlook for Full Year 2013
Based on current market and operating conditions, estimated production capacity and forecasted customer demand, the Company reiterates its PV module shipment target to be in the estimated range of 3.2 GW to 3.3 GW for fiscal year 2013, which represents an increase of 39.4% to 43.7% compared to fiscal year 2012.
Non-GAAP Financial Measures
To supplement the financial measures calculated in accordance with GAAP, this press release includes certain non-GAAP financial measures of adjusted net income (loss) and adjusted diluted earnings (loss) per ordinary share and per ADS, each of which is adjusted to exclude, as applicable, items related to share-based compensation, inventory provision, interest expense consisting of changes in the fair value of the interest-rate swap and the amortization of the debt discount, the amortization of intangible assets arising from purchase price allocation in connection with a series of acquisitions of equity interests in Tianwei Yingli. The Company believes excluding these items from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company's on-going performance as such items are not directly attributable to the underlying performance of the Company's business operations and do not impact its cash earnings. The Company also believes these non-GAAP financial measures are important to help investors understand the Company's current financial performance and future prospects and compare business trends among different reporting periods on a consistent basis. These non-GAAP financial measures should be considered in addition to financial measures presented in accordance with GAAP, but should not be considered as a substitute for, or superior to, financial measures presented in accordance with GAAP. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure, please see the financial information included elsewhere in this press release.
Currency Conversion
Solely for the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB 6.1200 to US$1.00, the noon buying rate in New York for cable transfers of Renminbi per U.S. dollar as set forth in the H.10 weekly statistical release of the Federal Reserve Board as of September 30, 2013. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollar amounts at such rate, or at any other rate. The percentages stated in this press release are calculated based on Renminbi.