×

JA Solar Announces Third Quarter 2014 Results

SHANGHAI, China, Nov. 18, 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 third quarter ended September 30, 2014.

Third Quarter 2014 Highlights

  • Total shipments were 785.4 megawatts ("MW"), increases of +57.0% y/y and +15.2% sequentially

  • Shipments of modules and module tolling were 693.5 MW, increases of +127.4% y/y and +55.6% sequentially

  • Shipments of cells and cell tolling were 91.9 MW, decreases of 52.9% y/y and 61.1% sequentially

  • Net revenue was RMB 3.0 billion ($492.2 million), an increase of +71.8% y/y and +24.7% sequentially

  • Gross margin was 15.0%, an increase of 370 basis points y/y but a decrease of 20 basis points sequentially

  • Operating profit was RMB 189.6 million ($30.9 million), compared to an operating loss of RMB 31.6 million ($5.2 million) in the third quarter of 2013, and an operating profit of RMB 89.7 million ($14.6 million) in the second quarter of 2014

  • Net income was RMB 155.4 million ($25.3 million), compared to a net loss of RMB 227.0 million ($37.0 million) in the third quarter of 2013, and a net income of RMB 40.1 million ($6.5 million) in the second quarter of 2014

  • Earnings per diluted ADS were RMB 2.55 ($0.42), compared to a loss per diluted ADS of RMB 6.77 ($1.10) in the third quarter of 2013, and an earnings per diluted ADS of RMB 0.59 ($0.10) in the second quarter of 2014

  • Cash and cash equivalents were RMB 1.7 billion ($279.5 million), a decrease of RMB 312.8 million ($51.0 million) during the quarter

  • Operating cash flow was negative RMB 184.1 million ($30.0 million), compared to negative RMB 84.0 million ($13.7 million) in the second quarter of 2014

  • Non-GAAP earnings1 per diluted ADS were RMB 1.30 ($0.21), compared to Non-GAAP loss per diluted ADS of RMB 2.24 ($0.36) in the third quarter of 2013, and Non-GAAP earnings per diluted ADS of RMB 0.87 ($0.14) in the second quarter of 2014

Mr. Baofang Jin, chairman and CEO of JA Solar, commented, "JA Solar delivered strong results in the third quarter, as our strategic shift from cells to modules started to come to fruition. While we remain a leader in cell technology and cell manufacturing, higher margin module sales has become one of the key results drivers at JA. Module sales more than doubled year over year and were up 52% sequentially, mainly due to robust growth in sales to Japan and China. In fact, our capacity is fully booked for the fourth quarter, resulting in some of the best visibility we have had in some time."

Mr. Jin continued, "We are confident in our guidance for the whole year, as well as our ability to sustain our current margin structure into Q4. We remain committed to tight expense control, and are optimistic about our growing penetration of the downstream project business."

Third Quarter 2014 Financial Results

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

Total shipments were 785.4 MW, above the high end of the previously announced guidance of 730 to 760 MW. Shipments grew 15.2% sequentially and 57.0% year over year. In addition, the Company shipped 27.1 MW of modules to its downstream projects.

Shipment breakdown by product (MW)

2013Q3 2014Q2 2014Q3 QoQ% YoY%
Modules and module tolling 305.0 445.8 693.5 55.6% 127.4%
Cells and cell tolling 195.2 236.0 91.9 -61.1% -52.9%
Total 500.2 681.8 785.4 15.2% 57.0%

Shipment breakdown by region (percentage)

2013Q3 2014Q2 2014Q3 QoQ(pp) YoY(pp)
China 38.7% 26.0% 34.8% 8.8pp -3.9pp
APAC ex-China 39.3% 47.1% 46.4% -0.7pp 7.1pp
Europe 9.3% 13.9% 9.2% -4.7pp -0.1pp
Americas 10.7% 11.2% 4.7% -6.5pp -6.0pp
Others 2.0% 1.8% 4.9% 3.1pp 2.9pp

Net revenue was RMB 3.0 billion ($492.2 million), an increase of 71.8% y/y and 24.7% sequentially. Growth was driven by the ongoing shift in sales to modules, which were 88.3% of shipments, as well as penetration of our key geographies, most notably China and Japan.

Gross profit of RMB 454.2 million ($74.0 million) increased 128.5% y/y and 23.5% sequentially. Gross margin was 15.0%, which compares to 11.3% in the year-ago quarter, and 15.2% in the second quarter of 2014. The gross margin increase y/y was due to better fixed cost absorption against higher shipment volumes. Gross margin was essentially flat sequentially, due to lower wafer pricing and better product mix, which offset a slight decline in ASP.

Total operating expenses of RMB 264.6 million ($43.1 million) were 8.8% of revenue. This compares to operating expenses of 13.1% of revenue in the year-ago quarter, and 11.5% of revenue in the second quarter of 2014. The sequential decrease in operating expense was primarily due to tight control of expenses.

Operating profit was RMB 189.6 million ($30.9 million), compared to an operating loss of RMB 31.6 million ($5.2 million) in the year-ago quarter, and operating profit of RMB 89.7 million ($14.6 million) in the second quarter of 2014. The sequential increase in operating profit was primarily due to tight expense controls and the increased revenue.

Interest expense was RMB 56.7 million ($9.2 million), compared to RMB 56.9 million ($9.3 million) in the year-ago quarter, and RMB 54.8 million ($8.9 million) in the second quarter of 2014.

The change in fair value of warrant derivatives was positive RMB 75.3 million ($12.3 million), compared with negative RMB 16.4 million ($2.7 million) in the second quarter of 2014, and negative RMB 138.3 million ($22.5 million) in the year-ago quarter. The warrants were issued on August 16, 2013 in conjunction with the Company's $96 million registered direct offering. The positive change in fair value, which was a non-cash gain, was mainly due to the decrease in the Company's stock price during the quarter.

Earnings per diluted ADS were RMB 2.55 ($0.42), compared to a loss per diluted ADS of RMB 6.77 ($1.10) in the year-ago quarter, and earnings per diluted ADS of RMB 0.59 ($0.10) in the second quarter of 2014.

Operating cash flow was negative RMB 184.1 million ($30.0 million). Cash usage principally reflected an increase in accounts receivable, as the Company shipped substantially higher volumes sequentially to meet ramping demand.

Liquidity

As of Sep 30, 2014, the Company had cash and cash equivalents of RMB 1.7 billion ($279.5 million), and total working capital of RMB 2.0 billion ($325.5 million). Total short-term borrowings were RMB 2.1 billion ($340.0 million). Total long-term borrowings were RMB 1.9 billion ($306.0 million), of which RMB 172.0 million ($28.0 million) were due in one year.

Share Buyback

The board of directors of the Company approved a share repurchase program that authorizes the Company's management to repurchase up to US$90 million worth of its issued and outstanding American Depositary Shares prior to Nov 17, 2015.

The program permits the Company to purchase ADSs from time to time on the open market at prevailing market prices, in accordance with applicable securities laws and subject to restrictions relating to volume, price and timing.

Business Outlook

For the fourth quarter of 2014, the Company expects total cell and module shipments to be in the range of 850 MW to 900 MW. This results in full year 2014 shipments expected to be in the range of 3.1 GW to 3.2 GW. The Company now expects to ship 160 MW of modules to its downstream projects, compared with the previously guided 200 MW.

Investor Conference Call / Webcast Details

JA Solar will hold a conference call on Tuesday, November 18, 2014, at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Beijing/Hong Kong Time), to discuss the Company's third quarter 2014 results.

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

International: +61-2-8373-3610
U.S.: +1-845-507-1610
Hong Kong: +852-3051-2792
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: 31253472

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, 2014, which was RMB 6.1380 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 September 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 expects to ship 3.1 GW to 3.2 GW of solar power products in 2014. 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
Sep. 30, 2013 Jun. 30, 2014 Sep. 30, 2014 Sep. 30, 2014
RMB'000 RMB'000 RMB'000 USD'000
Net revenues 1,758,444 2,422,402 3,021,304 492,229
Cost of sales (1,559,720) (2,054,505) (2,567,126) (418,235)
Gross profit 198,724 367,897 454,178 73,994
Selling, general and administrative expenses (212,639) (244,577) (225,456) (36,731)
Research and development expenses (17,715) (33,640) (39,170) (6,382)
Total operating expenses (230,354) (278,217) (264,626) (43,113)
(Loss)/income from operations (31,630) 89,680 189,552 30,881
Interest expense (56,875) (54,750) (56,652) (9,230)
Change in fair value of warrant derivatives (138,333) (16,427) 75,332 12,273
Other income/(loss), net 8,174 31,729 (34,068) (5,550)
(Loss)/income before income taxes (218,664) 50,232 174,164 28,374
Income tax (expenses)/benefit (8,366) (10,132) (18,749) (3,055)
Net (loss)/income (227,030) 40,100 155,415 25,319
Fair value of warrants in excess of net proceeds of equity offering (44,396) 0 0 0
Less: income attributable to noncontrolling interest 1,534 5,284 2,175 354
Net (loss)/income attributable to JA Solar Holdings (272,960) 34,816 153,240 24,965
Net (loss)/income per share attributable to ordinary shareholders::
Basic (Note) (1.35) 0.12 0.51 0.08
Diluted (1.35) 0.12 0.51 0.08
Weighted average number of shares outstanding:
Basic 201,665,457 242,253,578 248,618,157 248,618,157
Diluted 201,665,457 242,660,788 248,984,677 248,984,677
Comprehensive (loss)/income
Net (loss)/income (227,030) 40,100 155,415 25,319
Foreign currency translation adjustments, net of tax (2,447) 2,290 5,045 822
Other comprehensive income/(loss) (2,447) 2,290 5,045 822
Comprehensive (loss)/income (229,477) 42,390 160,460 26,141
Fair value of warrants in excess of net proceeds of equity offering (44,396) 0 0 0
Income attributable to noncontrolling interest 1,534 5,284 2,175 354
Comprehensive (loss)/income attributable to JA Solar Holdings (275,407) 37,106 158,285 25,787
NON-GAAP RECONCILIATION
GAAP net (loss)/income attributable to JA Solar Holdings (272,960) 34,816 153,240 24,965
Change in fair value of warrant derivatives 138,333 16,427 (75,332) (12,273)
Fair value of warrants in excess of net proceeds of equity offering 44,396 0 0 0
Non-GAAP net (loss)/income attributable to JA Solar Holdings (90,231) 51,243 77,908 12,692
Non-GAAP net (loss)/income per share attributable to ordinary shareholders:
Basic (0.45) 0.17 0.26 0.04
Diluted (0.45) 0.17 0.26 0.04
Non-GAAP weighted average number of shares outstanding:
Basic 201,665,457 242,253,578 248,618,157 248,618,157
Diluted 201,665,457 242,660,788 248,984,677 248,984,677
Note: JA Solar excludes net income attributable to the participating warrant holder of RMB 27.3 million (US$4.4 million) from the numerator of basic EPS in the third quarter 2014.
JA Solar Holdings Co., Ltd.
Condensed Consolidated Statements of Operations
(Unaudited)
For nine months ended
Sep. 30, 2013 Sep. 30, 2014 Sep. 30, 2014
RMB'000 RMB'000 USD'000
Net revenues 5,019,744 7,719,216 1,257,611
Cost of sales (4,592,412) (6,516,583) (1,061,679)
Gross profit 427,332 1,202,633 195,932
Selling, general and administrative expenses (519,740) (661,597) (107,787)
Research and development expenses (57,719) (100,939) (16,445)
Total operating expenses (577,459) (762,536) (124,232)
(Loss)/income from operations (150,127) 440,097 71,700
Interest expense (234,924) (168,169) (27,398)
Change in fair value of warrant derivatives (138,333) 25,351 4,130
Other (loss)/income, net (17,647) 26,785 4,364
(Loss)/income before income taxes (541,031) 324,064 52,796
Income tax (expenses)/benefit (24,971) (43,537) (7,093)
Net (loss)/income (566,002) 280,527 45,703
Fair value of warrants in excess of net proceeds of equity offering (44,396) 0 0
Less: income attributable to noncontrolling interest 5,663 9,836 1,603
Net (loss)/income attributable to JA Solar Holdings (616,061) 270,691 44,100
Net (loss)/income per share attributable to ordinary shareholders:
Basic (3.14) 0.92 0.15
Diluted (3.14) 0.86 0.14
Weighted average number of shares outstanding:
Basic 196,228,298 240,005,377 240,005,377
Diluted 196,228,298 240,682,850 240,682,850
Comprehensive loss
Net (loss)/income (566,002) 280,527 45,703
Foreign currency translation adjustments, net of tax 7,658 1,478 241
Other comprehensive (loss)/income 7,658 1,478 241
Comprehensive (loss)/income (558,344) 282,005 45,944
Fair value of warrants in excess of net proceeds of equity offering (44,396) 0 0
Income attributable to noncontrolling interest 5,663 9,836 1,603
Comprehensive (loss)/income attributable to JA Solar Holdings (608,403) 272,169 44,341
NON-GAAP RECONCILIATION
GAAP net (loss)/income attributable to JA Solar Holdings (616,061) 270,691 44,100
Change in fair value of warrant derivatives 138,333 (25,351) (4,130)
Fair value of warrants in excess of net proceeds of equity offering 44,396 0 0
Non-GAAP net (loss)/income attributable to JA Solar Holdings (433,332) 245,340 39,970
Non-GAAP net loss per share attributable to ordinary shareholders:
Basic (2.21) 0.83 0.13
Diluted (2.21) 0.78 0.13
Non-GAAP weighted average number of shares outstanding:
Basic 196,228,298 240,005,377 240,005,377
Diluted 196,228,298 240,682,850 240,682,850
JA Solar Holdings Co., Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
Dec. 31, Sep. 30,
2013 2014 2014
RMB'000 RMB'000 USD'000
ASSETS
Current assets:
Cash and cash equivalents 2,119,740 1,715,351 279,464
Restricted cash 588,413 972,330 158,412
Accounts receivable 1,044,111 2,252,692 367,007
Inventories 1,347,094 2,098,860 341,945
Advances to suppliers 401,472 378,742 61,704
Project asset -- 485,117 79,035
Other current assets 851,203 767,589 125,056
Total current assets 6,352,033 8,670,681 1,412,623
Property and equipment, net 4,158,108 4,311,419 702,414
Project asset 47,746 -- --
Advances to suppliers 753,913 643,803 104,888
Long-term investment 48,802 3,000 489
Other long term assets 521,092 560,669 91,344
Total assets 11,881,694 14,189,572 2,311,758
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 1,042,432 2,086,935 340,002
Accounts payable 1,882,631 3,174,333 517,161
Advances from customers 202,723 197,571 32,188
Current portion of long term borrowings 936,163 172,000 28,022
Derivative liabilities-warrants 31,106 155,295 25,301
Accrued and other liabilities 945,829 886,503 144,429
Total current liabilities 5,040,884 6,672,637 1,087,103
Long-term borrowings 1,554,000 1,706,400 278,006
Derivative liabilities-warrants 154,259 -- --
Other long term liabilities 428,472 515,469 83,980
Total liabilities 7,177,615 8,894,506 1,449,089
Total JA Solar Holdings shareholders' equity 4,620,262 5,201,412 847,411
Noncontrolling interest 83,817 93,654 15,258
Total shareholders' equity 4,704,079 5,295,066 862,669
Total liabilities and shareholders' equity 11,881,694 14,189,572 2,311,758

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.