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JA Solar Announces Second Quarter 2014 Results

SHANGHAI, China, Aug. 20, 2014 (GLOBE NEWSWIRE) -- JA Solar Holdings Co., Ltd. (Nasdaq:JASO) ("JA Solar" or the "Company"), one of the world's largest manufacturers of high-performance solar power products, today announced its unaudited financial results for its second quarter ended June 30, 2014.

Second Quarter 2014 Highlights

  • Total shipments were 681.8 megawatts ("MW"), increases of +47.0% y/y and +6.8% sequentially

  • Shipments of modules and module tolling were 445.8 MW, increases of +75.6% y/y and +14.9% sequentially

  • Shipments of cells and cell tolling were 236.0 MW, increases of +12.5% y/y and decreases of 5.7% sequentially

  • Net revenue was RMB 2.4 billion ($390.5 million), an increase of +52.9% y/y and +6.5% sequentially

  • Gross margin was 15.2%, an increase of 710 basis points y/y but a decrease of 150 basis points sequentially

  • Operating profit was RMB 89.7 million ($14.5 million), compared to an operating loss of RMB 33.3 million ($5.4 million) in the second quarter of 2013, and an operating profit of RMB 160.9 million ($25.9 million) in the first quarter of 2014

  • Net income was RMB 40.1 million ($6.5 million), compared to a net loss of RMB 132.4 million ($21.3 million) in the second quarter of 2013, and a net income of RMB 85.0 million ($13.7 million) in the first quarter of 2014

  • Earnings per diluted ADS were RMB 0.59 ($0.10), compared to a loss per diluted ADS of RMB 3.58 ($0.58) in the second quarter of 2013, and an earnings per diluted ADS of RMB 1.41 ($0.23) in the first quarter of 2014

  • Cash and cash equivalents were RMB 2.0 billion ($326.9 million), an increase of RMB 80.1 million ($12.9 million) during the quarter

  • Operating cash flow was negative RMB 84.0 million ($13.5 million), compared to positive RMB 198.2 million ($32.0 million) in the first quarter of 2014

  • Non-GAAP earnings1 per diluted ADS were RMB 0.87 ($0.14), compared to Non-GAAP loss per diluted ADS of RMB 3.58 ($0.58) in the second quarter of 2013, and Non-GAAP earnings per diluted ADS of RMB 1.99 ($0.32) in the first quarter of 2014

Mr. Baofang Jin, chairman and CEO of JA Solar, commented, "Our second quarter results were satisfactory, with strong revenue growth, continued bottom-line profitability, and progress in our transition from cells to modules as our main revenue stream. This successful transition has enabled us to emerge as a tier 1 module supplier in the world. Furthermore, we are actively growing our downstream business. In the second half of 2014, we expect to sustain both our growth and profitability, due to accelerating activity in China, and continued favorable product and geographic mix"

Mr. Jin continued, "Notably, our geographic mix in modules remains very favorable, a result of our determination to focus on the countries with the best growth and pricing prospects. Japan performed very well in the quarter, while module shipments into China and Europe were stable. North America saw a solid surge sequentially and now represents 9% of our module sales. This favorable geographic exposure is the result of strategic decisions we made in the past several quarters."

"We are confident in our prospects in the second half of this year. Our optimistic outlook is predicated on several trends. We expect better demand in China as both utility scale and distributed generation projects start construction in the second half. We believe secular demand trends in Japan will continue due to their unique energy needs, and we expect to grow our business in the North American market. Therefore we have revised up our full year shipment objective to be in the range of 2.9 GW to 3.1 GW."

Second Quarter 2014 Financial Results

All shipment and financial figures refer to the quarter ended June 30, 2014, unless otherwise specified. All "year over year" or "y/y" comparisons are against the quarter ended June 30, 2013. All "sequential" comparisons are against the quarter ended March 31, 2014.

Total shipments were 681.8 MW, within the range of previous announced guidance of 670 to 700 MW. Shipments grew 6.8% sequentially and 47.0% year-over-year. In addition, the Company shipped 43.7 MW of modules to its downstream projects.

Shipment breakdown by product (MW)
2013Q2 2014Q1 2014Q2 QoQ% YoY%
Modules and module tolling 253.9 388.0 445.8 14.9% 75.6%
Cells and cell tolling 209.8 250.1 236.0 -5.7% 12.5%
Total 463.7 638.1 681.8 6.8% 47.0%
Shipment breakdown by region (percentage)
2013Q2 2014Q1 2014Q2 QoQ(pp) YoY(pp)
China 37.8% 26.0% 26.0% 0pp -11.8pp
APAC ex-China 34.2% 52.8% 47.1% -5.7pp 12.9pp
Europe 19.7% 14.8% 13.9% -0.9pp -5.8pp
Americas 7.9% 4.1% 11.2% 7.1pp 3.3pp
Others 0.4% 2.3% 1.8% -0.5pp 1.4pp

Net revenue was RMB 2.4 billion ($390.5 million), an increase of 52.9% y/y and 6.5% sequentially. Growth was driven by the ongoing shift in sales to modules, which were 65.4% of shipments, as well as penetration of our key geographies, most notably China and Japan.

Gross profit of RMB 367.9 million ($59.3 million) increased 185.9% y/y but declined 3.3% sequentially. Gross margin was 15.2%, which compares to 8.1% in the year-ago quarter, and 16.7% in the first quarter of 2014. The gross margin increase y/y was due to improved overall market conditions. The sequential decline was primarily due to a higher percentage of module shipments to China, where the module ASP declined slightly, and an adjustment of the minimum import price in European Union.

Total operating expenses of RMB 278.2 million ($44.8 million) were 11.5% of revenue. This compares to operating expenses of 10.2% of revenue in the year-ago quarter, and 9.7% of revenue in the first quarter of 2014. The sequential increase in operating expense was primarily due to increased freight and insurance expenses associated with increased module shipments, especially to the Americas.

Operating profit was RMB 89.7 million ($14.5 million), compared to an operating loss of RMB 33.3 million ($5.4 million) in the year-ago quarter, and operating profit of RMB 160.9 million ($25.9 million) in the first quarter. The sequential decrease in operating profit was primarily due to the increased operating expenses.

Interest expense was RMB 54.8 million ($8.8 million), compared to RMB 79.7 million ($12.9 million) in the year-ago quarter, and RMB 56.8 million ($9.2 million) in the first quarter of 2014.

The change in fair value of warrant derivatives was negative RMB 16.4 million ($2.6 million), compared with negative RMB 33.6 million ($5.4 million) in the first quarter of 2014. The warrants were issued on August 16, 2013 in conjunction with the Company's $96 million registered direct offering, so there is no year-over-year comparison. The change-in-fair-value expense, which was a non-cash charge, was mainly due to the increase in the Company's stock price during the quarter.

Earnings per diluted ADS were RMB 0.59 ($0.10), compared to a loss per diluted ADS of RMB 3.58 ($0.58) in the year-ago quarter, and earnings per diluted ADS of RMB 1.41 ($0.23) in the first quarter of 2014.

Operating cash flow was negative RMB 84.0 million ($13.5 million).

Liquidity

As of June 30, 2014, the Company had cash and cash equivalents of RMB 2.0 billion ($326.9 million), and total working capital of RMB 1.7 billion ($275.7 million). Total short-term borrowings were RMB 1.9 billion ($309.2 million). Total long-term borrowings were RMB 1.9 billion ($305.5 million), of which RMB 272.0 million ($43.8 million) were due in one year.

Business Outlook

For the third quarter of 2014, the Company expects total cell and module shipments to be in the range of 730 MW to 760 MW. For the full year 2014, the Company revised up its previous shipment guidance. The Company now expects to ship between 2.9 GW and 3.1 GW, higher than previous guidance of a range of 2.7 GW to 2.9 GW. Consistent with the previous guidance, the new guidance includes 200 MW of module shipments to the Company's downstream projects.

Manufacturing Capacity Update

With the completion of its capacity expansion during the quarter, JA Solar now has annual wafer production capacity of 1.0 GW, annual cell production capacity of 2.8 GW, and annual module production capacity of 2.8 GW. Since the end of 2013, cell capacity has increased by 300 MW, while module capacity has increased by 1 GW.

Investor Conference Call / Webcast Details

JA Solar will hold a conference call on Wednesday, August 20, 2014, at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Beijing/Hong Kong Time), to discuss the Company's second quarter 2014 results.

Dial-in details for the live conference call are as follows:

International: +65-6723-9381
U.S.: +1 (845) 675-0437
Hong Kong: +852-2475-0994
Passcode: JA Solar

A live webcast of the conference call will be available on the Company's website at http://www.jasolar.com.

A replay of the call will be available beginning two hours after the live call.

The dial-in details for the replay are as follows:

International: + 61-2-8199-0299
United States: +1 (855) 452-5696
Passcode: 84732655

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 June 30, 2014, which was RMB 6.2036 to $1.00. 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 June 30, 2014, or at any other date. The percentages stated in this press release are calculated based on Renminbi.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words such as "may," "expect," "anticipate," "aim," "intend," "plan," "believe," "estimate," "potential," "continue," and other similar statements. Statements other than statements of historical facts in this announcement are forward-looking statements, including but not limited to, our expectations regarding the expansion of our manufacturing capacities, our future business development, and our beliefs regarding our production output and production outlook. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. Further information regarding these and other risks is included in Form 20-F and other documents filed with the Securities and Exchange Commission. The Company undertakes no obligation to update forward-looking statements, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

About JA Solar Holdings Co., Ltd.

JA Solar Holdings Co., Ltd. is a leading manufacturer of high-performance solar power products that convert sunlight into electricity for residential, commercial, and utility-scale power generation. The Company is one of the world's largest producers of solar power products. Its standard and high-efficiency product offerings are among the most powerful and cost-effective in the industry. The Company distributes products under its own brand and also produces on behalf of its clients. The Company shipped 2.1 GW of solar power products in 2013. JA Solar is headquartered in Shanghai, China, and maintains production facilities in Shanghai, as well as Hebei, Jiangsu and Anhui provinces.

For more information, please visit www.jasolar.com.

1 JA Solar adjusts net income attributable to the Company's ordinary shareholders 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, and (2) fair value of such warrants exceeding net proceeds from the Offering.

JA Solar Holdings Co., Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For three months ended
Jun. 30, 2013 Mar. 31, 2014 Jun. 30, 2014 Jun. 30, 2014
RMB'000 RMB'000 RMB'000 USD'000
Net revenues 1,584,226 2,275,510 2,422,402 390,483
Cost of sales (1,455,563) (1,894,952) (2,054,505) (331,179)
Gross profit 128,663 380,558 367,897 59,304
Selling, general and administrative expenses (143,291) (191,564) (244,577) (39,425)
Research and development expenses (18,639) (28,129) (33,640) (5,423)
Total operating expenses (161,930) (219,693) (278,217) (44,848)
(Loss)/income from operations (33,267) 160,865 89,680 14,456
Interest expense (79,739) (56,767) (54,750) (8,826)
Change in fair value of warrant derivatives -- (33,555) (16,427) (2,648)
Other income, net (8,281) 29,124 31,729 5,115
(Loss)/income before income taxes (121,287) 99,667 50,232 8,097
Income tax (expenses)/benefit (11,139) (14,656) (10,132) (1,633)
Net (loss)/income (132,426) 85,011 40,100 6,464
Less: income attributable to noncontrolling interest 6,342 2,377 5,284 852
Net (loss)/income attributable to JA Solar Holdings (138,768) 82,634 34,816 5,612
Net (loss)/income per share attributable to ordinary shareholders::
Basic (Note) (0.72) 0.28 0.12 0.02
Diluted (0.72) 0.28 0.12 0.02
Weighted average number of shares outstanding:
Basic 193,594,501 228,738,374 242,253,578 242,253,578
Diluted 193,594,501 229,194,129 242,660,788 242,660,788
Comprehensive (loss)/income
Net (loss)/income (132,426) 85,011 40,100 6,464
Foreign currency translation adjustments, net of tax 8,702 (5,857) 2,290 369
Other comprehensive income/(loss) 8,702 (5,857) 2,290 369
Comprehensive (loss)/income (123,724) 79,154 42,390 6,833
Income attributable to noncontrolling interest 6,342 2,377 5,284 852
Comprehensive (loss)/income attributable to JA Solar Holdings (130,066) 76,777 37,106 5,981
NON-GAAP RECONCILIATION
GAAP net (loss)/income attributable to JA Solar Holdings (138,768) 82,634 34,816 5,612
Change in fair value of warrant derivatives 0 33,555 16,427 2,648
Non-GAAP net (loss)/income attributable to JA Solar Holdings (138,768) 116,189 51,243 8,260
Non-GAAP net (loss)/income per share attributable to ordinary shareholders:
Basic (0.72) 0.40 0.17 0.03
Diluted (0.72) 0.40 0.17 0.03
Non-GAAP weighted average number of shares outstanding:
Basic 193,594,501 228,738,374 242,253,578 242,253,578
Diluted 193,594,501 229,194,129 242,660,788 242,660,788
Note: JA Solar excludes net income attributable to the participating warrant holder of RMB 6.0 million (US$1.0 million) from the numerator of basic EPS in the second quarter 2014.
JA Solar Holdings Co., Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
For six months ended
Jun. 30, 2013 Jun. 30, 2014 Jun. 30, 2014
RMB'000 RMB'000 USD'000
Net revenues 3,261,300 4,697,912 757,288
Cost of sales (3,032,692) (3,949,457) (636,640)
Gross profit 228,608 748,455 120,648
Selling, general and administrative expenses (307,102) (436,141) (70,304)
Research and development expenses (40,003) (61,769) (9,957)
Total operating expenses (347,105) (497,910) (80,261)
(Loss)/income from operations (118,497) 250,545 40,387
Interest expense (178,049) (111,517) (17,976)
Change in fair value of warrant derivatives (49,982) (8,057)
Other (loss)/income, net (25,821) 60,853 9,809
(Loss)/income before income taxes (322,367) 149,899 24,163
Income tax (expenses)/benefit (16,605) (24,788) (3,996)
Net (loss)/income (338,972) 125,111 20,167
Less: income attributable to noncontrolling interest 4,129 7,661 1,235
Net (loss)/income attributable to JA Solar Holdings (343,101) 117,450 18,932
Net loss per share attributable to ordinary shareholders:
Basic (1.77) 0.40 0.06
Diluted (1.77) 0.34 0.05
Weighted average number of shares outstanding:
Basic 193,449,305 235,603,290 235,603,290
Diluted 193,449,305 236,439,213 236,439,213
Comprehensive loss
Net (loss)/income (338,972) 125,111 20,167
Foreign currency translation adjustments, net of tax 10,105 (3,567) (575)
Other comprehensive (loss)/income 10,105 (3,567) (575)
Comprehensive (loss)/income (328,867) 121,544 19,592
Income attributable to noncontrolling interest 4,129 7,661 1,235
Comprehensive (loss)/income attributable to JA Solar Holdings (332,996) 113,883 18,357
NON-GAAP RECONCILIATION
GAAP net (loss)/income attributable to JA Solar Holdings (343,101) 117,450 18,932
Change in fair value of warrant derivatives 0 49,982 8,057
Non-GAAP net (loss)/income attributable to JA Solar Holdings (343,101) 167,432 26,989
Non-GAAP net loss per share attributable to ordinary shareholders:
Basic (1.77) 0.57 0.09
Diluted (1.77) 0.52 0.08
Non-GAAP weighted average number of shares outstanding:
Basic 193,449,305 235,603,290 235,603,290
Diluted 193,449,305 236,439,213 236,439,213
JA Solar Holdings Co., Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31, Jun. 30,
2013 2014 2014
RMB'000 RMB'000 USD'000
ASSETS
Current assets:
Cash and cash equivalents 2,119,740 2,028,126 326,927
Restricted cash 588,413 853,908 137,647
Accounts receivable 1,044,111 1,563,139 251,973
Inventories 1,347,094 1,989,784 320,747
Advances to suppliers 401,472 364,458 58,749
Project asset -- 311,450 50,205
Other current assets 851,203 786,608 126,799
Total current assets 6,352,033 7,897,473 1,273,047
Property and equipment, net 4,158,108 4,309,965 694,752
Project asset 47,746 -- --
Advances to suppliers 753,913 698,019 112,518
Long-term investment 48,802 -- --
Other long term assets 521,092 493,360 79,528
Total assets 11,881,694 13,398,817 2,159,845
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 1,042,432 1,918,043 309,182
Accounts payable 1,882,631 2,721,966 438,772
Advances from customers 202,723 159,310 25,680
Current portion of long term borrowings 936,163 272,000 43,846
Derivative liabilities-warrants 31,106 230,639 37,178
Accrued and other liabilities 945,829 884,974 142,655
Total current liabilities 5,040,884 6,186,932 997,313
Long-term borrowings 1,554,000 1,623,000 261,622
Derivative liabilities-warrants 154,259 -- --
Other long term liabilities 428,472 459,252 74,030
Total liabilities 7,177,615 8,269,184 1,332,965
Total JA Solar Holdings shareholders' equity 4,620,262 5,038,155 812,134
Noncontrolling interest 83,817 91,478 14,746
Total shareholders' equity 4,704,079 5,129,633 826,880
Total liabilities and shareholders' equity 11,881,694 13,398,817 2,159,845

CONTACT: ICR, LLC Gary Dvorchak, CFA Senior Vice President Phone (U.S.): +1 (310) 954-1123 Phone (China): +86 (10) 6583 7500 Email: gary.dvorchak@icrinc.com

Source:JA Solar Holdings Co., Ltd.

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