Total shipments in the third quarter of 2013 were 500.2 MW, above the high end of the Company's previously provided guidance of 450 MW to 470 MW. This represents a 7.9% increase from 463.7 MW in the second quarter of 2013 and a 19.7% increase from 417.8 MW in the third quarter of 2012.
Shipment breakdown by product (MW)
(MW) 2012Q3 2013Q2 2013Q3 QoQ% YoY%
Modules and module tolling 246.6 253.9 305.0 20.1% 23.7%
Cells and cell tolling 171.2 209.8 195.2 -7.0% 14.0%
Total 417.8 463.7 500.2 7.9% 19.7%
Shipment breakdown by region (percentage)
2012Q3 2013Q2 2013Q3 QoQ(pp) YoY(pp)
China 56.1% 37.8% 38.7% 0.9pp -17.4pp
APAC ex-China 8.9% 34.2% 39.3% 5.1pp 30.4pp
Europe 27.9% 19.7% 9.3% -10.4pp -18.6pp
Americas 5.5% 7.9% 10.7% 2.8pp 5.2pp
Others 1.6% 0.4% 2.0% 1.6pp 0.4pp
Revenue in the third quarter of 2013 was RMB 1.8 billion ($287.3 million), an increase of 11.0% from RMB 1.6 billion ($258.9 million) in the second quarter of 2013 and an increase of 7.2% from RMB 1.6 billion ($268.0 million) reported in the third quarter of 2012.
Gross profit in the third quarter of 2013 was RMB 198.7 million ($32.5 million), compared with gross profit of RMB 128.7 million ($21.0 million) in the second quarter of 2013 and a gross loss of RMB 96.6 million ($15.8 million) in the third quarter of 2012. Gross margin was 11.3% in the third quarter of 2013, compared with 8.1% in the second quarter of 2013 and negative 5.9% in the third quarter of 2012. The sequential increase in gross margin was primarily due to the Company's stringent cost-reduction initiatives.
Total operating expenses in the third quarter of 2013 were RMB 230.4 million ($37.6 million), compared with RMB 161.9 million ($26.5 million) in the second quarter of 2013 and RMB 534.6 million ($87.4 million) in the third quarter of 2012. The increase in total operating expenses quarter over quarter was primarily due to an accounts receivable provision of RMB 45.7 million ($7.5 million) in the third quarter of 2013 and an increase in transportation expenses in line with the increase in total shipments.
Operating loss in the third quarter of 2013 was RMB 31.6 million ($5.2 million), compared with an operating loss of RMB 33.3 million ($5.4 million) in the second quarter of 2013 and an operating loss of RMB 631.3 million ($103.1 million) in the third quarter of 2012. Operating margin in the third quarter of 2013 was negative 1.8%, compared with negative 2.1% in the second quarter of 2013 and negative 38.5% in the third quarter of 2012.
Change in fair value of warrant derivatives in the third quarter of 2013 was RMB 138.3 million ($22.6 million), compared with nil in the second quarter of 2013 and nil in the third quarter of 2012. The change in fair value of warrant derivatives was related to the change in fair value of certain warrants granted to certain investors in a registered direct offering closed on August 16, 2013.
Other income in the third quarter of 2013 was RMB 8.2 million ($1.3 million), compared with other loss of RMB 8.3 million ($1.4 million) in the second quarter of 2013 and other income of RMB 363.7 million ($59.4 million) in the third quarter of 2012.
Loss per diluted ADS in the third quarter of 2013 was RMB 6.77 ($1.11), compared with loss per diluted ADS of RMB 3.58 ($0.59) in the second quarter of 2013 and loss per diluted ADS of RMB 9.55 ($1.56) in the third quarter of 2012.
Non-GAAP net loss attributable to the Company's ordinary shareholders in the third quarter of 2013 was RMB 90.2 million (US$14.7 million), compared with a non-GAAP net loss attributable to the Company's ordinary shareholders of RMB 138.8 million ($22.7 million) in the second quarter of 2013 and a non-GAAP net loss attributable to the Company's ordinary shareholders of RMB 371.4 million ($60.7 million) in the third quarter of 2012.
Non-GAAP loss per diluted ADS in the third quarter of 2013 was RMB 2.24 ($0.37), compared with non-GAAP loss per diluted ADS of RMB 3.58 ($0.59) in the second quarter of 2013 and non-GAAP loss per diluted ADS of RMB 9.55 ($1.56) in the third quarter of 2012.
In the third quarter of 2013, the Company generated operating cash flow of RMB 623.4 million ($101.9 million).
Liquidity
As of September 30, 2013, the Company had cash, cash equivalents and restricted cash of RMB 2.5 billion ($401.1 million), compared to RMB 2.2 billion ($355.8 million) at the end of the second quarter of 2013.
As of September 30, 2013, total working capital was RMB 695.8 million ($113.7 million), compared with RMB 684.6 million ($111.9 million) as of June 30, 2013.
As of September 30, 2013, total short-term bank borrowings were RMB 983.7 million ($160.7 million), compared to RMB 672.4 million ($109.9 million) as of June 30, 2013.
As of September 30, 2013, total long-term bank borrowings were RMB 2.9 billion ($467.4 million), of which RMB 1.4 billion ($236.1 million) were due in one year. This compares to total long-term bank borrowings as of June 30, 2013 of RMB 3.5 billion ($578.5 million), of which RMB 2.0 billion ($329.0 million) were due in one year.
Recent Business Developments
On August 14, 2013, the Company announced that it has entered into a Securities Purchase Agreement with a single institutional investor (the "Investor") to issue securities in a registered direct offering (the "Offering"). In the Offering, the Company issued to the Investor American Depositary Shares, a "Series A-1 Warrant," a "Series A-2 Warrant," a "Series A-3 Warrant" and a "Series B Warrant." Between November 13, 2013 and November 15, 2013, the Series A-1 Warrant was exercised in full with 2,544,833 American Depositary Shares issued at a price of $9.43 per ADS, resulting in gross proceeds of $24.0 million to the Company.
Business Outlook
For the fourth quarter of 2013, the Company expects total cell and module shipments to be between 500 MW and 550 MW. For the full year 2013, the Company revises upwards its previous shipment guidance of between 1.7 GW and 1.9 GW to between 1.9 GW and 1.95 GW.
Investor Conference Call / Webcast Details
A conference call has been scheduled for today, Tuesday, November 26, 2013, at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing/Hong Kong Time). The call may be accessed by dialing +65-6723-9381 (international), +1-845-675-0437 (U.S.), or +852-2475-0994 (Hong Kong). The passcode is "JA Solar." A live webcast of the conference call will be available on the Company's website at www.jasolar.com. A replay of the call will be available beginning two hours after the live call and will be accessible by dialing +61-2-8199-0299 (international) or +1-646-254-3697 (U.S.). The passcode for the replay is 10762935.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), JA Solar uses certain non-GAAP financial measures, including non-GAAP net income (loss), non-GAAP earnings (loss) per share, non-GAAP earnings (loss) per ADS, and non-GAAP diluted weighted average ordinary shares outstanding, which are adjusted from the comparable GAAP results to exclude (1) changes in fair value of certain warrants granted to certain investors in a registered direct offering (the "Offering") closed on August 16, 2013, (2) fair value of such warrants exceeding net proceeds from the Offering, and (3) changes in fair value of embedded derivatives underlying the convertible notes issued in May 2008.
The Company believes that the use of non-GAAP information is useful for analysts and investors to evaluate JA Solar's current and future performances based on a more meaningful comparison of net income and diluted net income per ADS when compared with its peers and historical results from prior periods. These measures are not intended to represent or substitute numbers as measured under GAAP. The submission of non-GAAP numbers is voluntary and should be reviewed together with GAAP results.
Currency Convenience Translation
The conversion of Renminbi into U.S. dollars in this release, made solely for the convenience of the reader, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of September 30, 2013, which was RMB 6.1200 to $1.0. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on September 30, 2013, or at any other date. The percentages stated in this press release are calculated based on Renminbi.