Trina Solar Announces Fourth Quarter and Full Year 2014 Results

CHANGZHOU, China, March 4, 2015 /PRNewswire/ — Trina Solar Limited (NYSE: TSL) ("Trina Solar" or the "Company"), a global leader in photovoltaic ("PV") modules, solutions, and services, today announced its unaudited financial results for the fourth quarter and full year of 2014.

Fourth Quarter 2014 Financial and Operating Highlights

  • Total module shipments were 1,098.8 MW, consisting of 1,070.5 MW of external shipments and 28.3 MW of shipments to the Company’s own downstream power projects. This compares with total shipments of 1,063.8 MW, consisting of 936.8 MW of external shipments and 127 MW of shipments to the Company’s own downstream power projects, in the third quarter of 2014
  • Net revenues were $705.0 million, an increase of 14.3% from the third quarter of 2014
  • Gross profit was $111.0 million, an increase of 8.0% from the third quarter of 2014
  • Gross margin was 15.7%, compared with 16.7% in the third quarter of 2014
  • Operating income was $30.5 million, a decrease of 14.4% from the third quarter of 2014
  • Net income was $13.9 million, an increase of 31.5% from the third quarter of 2014
  • Net income excluding the net foreign exchange loss was $21.5 million. Net foreign currency exchange loss was $7.6 million, which included a gain on change in fair value of foreign exchange derivative instruments of $1.7 million
  • Earnings per fully diluted American Depositary Share ("ADS" and each ADS represents 50 of the Company’s ordinary shares) were $0.13, compared with $0.14 in the third quarter of 2014. Excluding net foreign exchange loss, earnings per ADS was $0.21

Full Year 2014 Financial and Operating Highlights

  • Total solar module shipments were approximately 3.66 GW, an increase of 41.9% from 2.58 GW in 2013
  • Total net revenues were $2.29 billion, an increase of 28.8% from 2013
  • Gross profit was $385.6 million, an increase of 76.7% from 2013
  • Gross margin was 16.9%, compared with 12.3% in 2013
  • Operating income was $120.1 million, compared with an operating loss of $38.1 million in 2013.
  • Net income for the full year was $61.3 million, compared with a net loss of $72.2 million for 2013
  • Earnings per fully diluted ADS for 2014 were $0.74, compared with a loss per fully diluted ADS of $1.01 in 2013

"We are pleased with our solid performance in the fourth quarter. We saw record shipment volumes, maintained our leading position as one of the largest solar companies in the world, and continued to increase our earnings quarter to quarter," said Mr. Jifan Gao, Chairman and CEO of Trina Solar.

"We also made significant progress in our downstream business. We connected two utility scale solar power plants totaling 210 MW in Xinjiang and Jiangsu provinces, and both are generating electricity. Our project pipeline in China is expanding and we are growing our downstream business at a steady pace. Overseas, we closed the sale of a 13.2 MW project in the UK in December 2014. The cash generated by the sale of the project will provide additional capital for the expansion of our downstream businesses. We expect our growing portfolio of overseas projects in the UK and Japan that we expect to sell upon completion to further contribute to our downstream business expansion in 2015.

"In the second half of 2014, we strengthened our focuses on developing distributed generation ("DG") projects in China. We have completed a number of projects and we will leverage our experience in developing utility scale projects and our module sales channels to further tap into the DG market and bolster our current downstream pipeline in China in 2015.

"In addition, we continued to deliver impressive new product innovations in solar cell technology. Our deep commitment to R&D and to delivering high quality products ensures our leading position in the very competitive and highly regulated PV industry. Our proven track record for superior quality, innovation, and efficient execution in the manufacturing sector positions us well as we build our company into a major developer and operator of solar projects.

"Overall, 2014 was a successful year for Trina Solar. Both our manufacturing and downstream businesses delivered strong results, and we emerged as the world’s largest supplier of solar modules. We took advantage of the rapidly growing demand in China, the world’s largest market for solar products, as well as the expansion of sales across various Asia-Pacific and Americas markets. We were also able to mitigate the industry trend of declining average sales prices ("ASPs") without compromising product quality by re-engineering our manufacturing processes and supply chain to drive down costs and by growing our portfolio of downstream projects to increase profitability.

"In 2015, we believe that our focus on technological innovation and delivering the highest quality and diversified module portfolio will drive growth in an expanding market. We will continue to build world-class capabilities and align our global resources to reinforce our leading position in the module business while exploring the utility, DG and other downstream markets."

Fourth Quarter 2014 Results

Net Revenues
Net revenues were $705.0 million, an increase of 14.3% sequentially and an increase of 34.1% year-over-year. Total shipments were 1,098.8 MW, consisting of 1,070.5 MW of external shipments and 28.3 MW of shipments to the Company’s downstream power projects. This compares with total shipments of 1,063.8 MW in the third quarter of 2014 and 770.1 MW in the fourth quarter of 2013. The sequential increase in revenues and shipments was primarily due to rising shipment volumes to China, Europe and the rest of Asia. The year-over-year increase in revenues and shipments was driven largely by growing demand from key geographical regions, particularly China, Japan and the U.S.

Gross Profit and Margin
Gross profit was $111.0 million, compared with $102.8 million in the third quarter of 2014 and $79.1 million in the fourth quarter of 2013.

Gross margin was 15.7%, compared with 16.7% in the third quarter of 2014 and 15.1% in the fourth quarter of 2013. The sequential decrease in gross margin was the result of several factors, including a change in the sales mix, reflecting higher shipments to China and other Asia-Pacific markets with relatively low ASPs, and fewer shipments to Japan in the quarter, which had relatively higher ASPs compared with other markets, coupled with a general decline in ASPs in some other key markets. The year-over-year margin increase was mainly due to the lower gross profit caused by the disposal and impairment loss on the Company’s downstream projects in the U.S. which was recognized in the fourth quarter of 2013.

Operating Expenses, Income and Margin
Operating expenses were $80.5 million, an increase of 19.9% sequentially and 35.7% year-over-year. The sequential increase was primarily due to an increase in salary, wages and benefits to employees. The Company’s operating expenses represented 11.4% of the fourth quarter net revenues, an increase from 10.9% in the third quarter of 2014 and 11.3% in the fourth quarter of 2013. Operating expenses included a reversal of accounts receivable provisions of 1.0 million in the fourth quarter of 2014, compared with $3.0 million in the third quarter of 2014 and $9.5 million in the fourth quarter of 2013. This provision reversal contributed to the increase in the operating expense ratio sequentially and year-over-year.

As a result, operating income was $30.5 million, compared with $35.6 million in the third quarter of 2014 and $19.8 million in the fourth quarter of 2013. Operating margin was 4.3%, compared with 5.8% in the third quarter of 2014 and 3.8% in the fourth quarter of 2013.

Net Interest Expense
Net interest expense was $8.3 million, compared with $7.0 million in the third quarter of 2014 and $8.2 million in the fourth quarter of 2013.

Foreign Currency Exchange Gain (Loss)
The Company recorded a net foreign currency exchange loss of $7.6 million, which included a gain on change in fair value of foreign exchange derivative instruments of $1.7 million. This compares with a net loss of $15.1 million in the third quarter of 2014 and a net gain of $1.8 million in the fourth quarter of 2013. The loss on foreign currency exchange was mainly due to the depreciation of the Euro and Japanese Yen against the U.S. dollar in the fourth quarter of 2014.

Income Tax Expense (Benefit)
Income tax expense was $1.7 million, compared with income tax expense of $5.2 million in the third quarter of 2014 and income tax benefit of $1.1 million in the fourth quarter of 2013.

Net Income (Loss) and Earnings (Loss) per ADS
Net income was $13.9 million, compared with $10.6 million in the third quarter of 2014 and $15.3 million in the fourth quarter of 2013. Net income excluding the net foreign exchange loss was $21.5 million, compared with $25.6 million in the third quarter of 2014.

Net margin was 2.0%, compared with 1.7% in the third quarter of 2014 and 2.9% in the fourth quarter of 2013. Net margin excluding net foreign exchange was 3.0% in the fourth quarter of 2014.

Earnings per fully diluted ADS were $0.13, compared with $0.14 in the third quarter of 2014 and $0.21 in the fourth quarter of 2013. Earnings per ADS excluding net foreign exchange loss, was $0.21 in the fourth quarter of 2014.

Financial Condition

As of December 31, 2014, the Company had $539.8 million in cash and cash equivalents, and restricted cash. Total bank borrowings were $842.7 million, of which $820.3 million were short-term borrowings, including $82.4 million of the current portion of long-term borrowings.

Shareholders’ equity was $972.8 million as of December 31, 2014, an increase from $930.9 million at the end of the third quarter of 2014.

Full Year 2014 Results

Total module shipments were 3.66 GW, consisting of 3.34 GW of external shipments and 324 MW of shipments to the Company’s downstream power projects, an increase of 41.9% from 2.58 GW in 2013, primarily driven by strong demand from China, Japan and the U.S.

Net revenues were $2.29 billion, an increase of 28.8% from $1.77 billion in 2013. Gross profit was $385.6 million, an increase of 76.7% from $218.2 million in 2013. Overall gross margin was 16.9%, compared with 12.3% in 2013. The gross margin expansion in 2014 was primarily due to faster reduction in manufacturing costs compared with the general decline in ASP and increased sales of downstream solar projects further improve gross margins. Operating profit was $120.1 million, compared with a loss of $38.1 million in 2013. Operating margin was 5.3%, compared with negative 2.1% in 2013.

Net income was $61.3 million, compared with a net loss of $72.2 million in 2013. Net margin was 2.7%, compared with negative 4.1% in 2013.

Earnings per fully-diluted ADS were $0.74, compared with a loss per fully diluted ADS of $1.01 for 2013.

First Quarter and Fiscal Year 2015 Guidance

First Quarter of 2015 Guidance

The Company expects to ship between 840 MW to 870 MW of PV modules, of which 60 MW to 70 MW of PV modules will be shipped to the Company’s downstream PV projects.

Fiscal Year 2015 Guidance

2015 Manufacturing Capacity

The Company expects to achieve annualized capacity at the end of 2015:

  • Ingot production capacity of approximately 2.8 GW
  • Wafer capacity of approximately 2.3 GW
  • PV cell capacity of approximately 3.5 GW
  • Module capacity of approximately 4.8 GW

The addition of 500 MW cell and 800 MW of module capacity in 2015 will partially come from the low-cost overseas manufacturing facilities that the Company is planning to build or jointly build with local partners in select countries outside of China. The addition of wafer and ingot capacity increase mainly come from equipment update and technology advancement as well as working with domestic partners.

The Company expects total PV module shipments between 4.4 GW and 4.6 GW, of which 700 MW to 800 MW of PV modules will be shipped to the Company’s downstream projects. The total shipment volume represents an increase of 20% to 26 % from 2014.

The Company expects to connect to the grid of 700 MW and 750 MW of downstream PV power projects across the world, including 30%-40% of DG projects in China.

Operations and Business Updates

2014 Manufacturing Capacity

As of December 31, 2014, the Company had annualized:

  • In-house ingot production capacity of approximately 2.2 GW
  • Wafer capacity of approximately 1.7 GW
  • PV cell capacity of approximately 3.0 GW
  • Module capacity of approximately 4.0 GW

Project Development

In 2014, the Company completed construction of 337 MW solar power projects consisting of 324 MW of utility projects and 13 MW of EPC for DG projects. As of March 4, 2015, the Company has a total of 232 MW solar power projects under operation, of which 22 MW are overseas and 210 MW are in China.

Recent Developments for Projects in China

In the fourth quarter of 2014, the Company connected to the grid a 90 MW solar power plant in Toksun, Xinjiang Province. The plant will be able to generate up to 118 million kWh of electricity per year and was granted a 20-year feed-in-tariff (FIT) of 0.95 RMB/KWh.

In addition, the Company has connected to the grid of a 120 MW utility project in Jiangsu Province at the end of 2014 which is generating electricity.

Recent Developments for International Projects

Outside of China, the Company is adopting tailored strategies for downstream business development that take into account a number of factors for each market, including, among others, the geographic location, the policy and regulatory environment, and the potential internal rate of return. The Company may also cooperate with local partners outside of China to further its project development overseas.

In Europe, the Company sold a 13.2 MW solar power project in the UK to Foresight Group in December 2014. This follows the sale of a similar 10.6 MW solar power project in the UK to the same buyer in September 2014. In addition, another 49.9 MW utility-scale solar power project in the UK is expected to be connected to the grid in the first quarter of 2015 and the Company intends to sell the project in the coming quarter.

Conference Call

The Company will host a conference call at 8:00 a.m. U.S. EST on March 4, 2015 (9:00 p.m. Beijing / Hong Kong, March 4, 2015), to discuss the results for the quarter and year ended December 31, 2014. Joining Jifan Gao, Chairman and CEO of Trina Solar, will be Teresa Tan, Chief Financial Officer, Zhiguo Zhu, Chief Operating Officer and President of Trina Solar’s Module Business Unit, and Yvonne Young, Investor Relations Director. Supplemental information will be made available on the Investors Section of Trina Solar’s website at www.trinasolar.com. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (800) 884-2382. International callers should dial +1 (660) 422-4933. The conference ID for the call is 8220-8121.

If you are unable to participate in the call at this time, a replay will be available from 11:30 a.m. EST on March 4th, 2015 through 11:59 p.m. EST on March 23rd, 2015. To access the replay, please dial +1(855)859-2056, international callers should dial +1(404)537-3406, and enter the conference ID 8220-8121.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties on Trina Solar’s website www.trinasolar.com. To listen to the live webcast, please go to Trina Solar’s website at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Trina Solar’s website for 90 days.

About Trina Solar Limited

Trina Solar Limited (NYSE:TSL) is a global leader in PV modules, solutions and services. Founded in 1997 as a PV system integrator, Trina Solar today drives smart energy together with installers, distributors, utilities and developers worldwide. The company’s industry-leading position is based on innovation excellence, superior product quality, vertically integrated capabilities and environmental stewardship. For more information, please visit www.trinasolar.com.

Safe Harbor Statement

This announcement 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 "will," "may," "expect," "anticipate," "aim," "intend," "plan," "believe," "estimate," "potential," "continue," and other similar statements. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company’s ability to raise additional capital to finance its activities; the effectiveness, profitability and marketability of its products; our expectations regarding the expansion of the Company’s manufacturing capacities; the Company’s future business development; the Company’s downstream project development and pipeline; the Company’s beliefs regarding its production output and production outlook; the future trading of the securities of the Company; the Company’s ability to operate as a public company; the period of time for which the Company’s current liquidity will enable the Company to fund its operations; general economic and business conditions; demand in various markets for solar products; the volatility of the Company’s operating results and financial condition; the Company’s ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company’s filings with the Securities and Exchange Commission.

In addition, the commencement of any downstream project is subject to a number of factors, some of which are beyond the Company’s control, such as the availability of network transmission and interconnection facilities, as well as obtaining certain government approvals, project rights based on the land location, land use rights as well as the right to construct manufacturing facilities in the relevant locations.

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 in which the Company operates. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, 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 such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results.

For further information, please contact:

Trina Solar Limited

Teresa Tan, CFO

Email: teresa.tan@trinasolar.com

Christensen IR

Linda Bergkamp

Phone: +1 480 614 3014 (US)

Email: lbergkamp@ChristensenIR.com

Yvonne Young

Investor Relations Director

Phone: + (86) 519-8517-6878 (Changzhou)

Email: ir@trinasolar.com

Trina Solar Limited

Unaudited Condensed Consolidated Statements of Operations

(US dollars in thousands, except ADS and share data)

For the Three Months Ended

For the Year Ended

Dec. 31,

Sep. 30,

Dec. 31,

Dec. 31,

Dec. 31,

2014

2014

2013

2014

2013

Net revenues

$ 705,039

$ 616,844

$ 525,638

$2,286,119

$1,774,971

Cost of revenues

594,009

514,050

446,517

1,900,547

1,556,777

Gross profit

111,030

102,794

79,121

385,572

218,194

Operating expenses

Selling expenses

40,166

36,433

33,566

135,061

132,823

General and administrative expenses

33,494

25,233

19,741

108,150

103,523

Research and development expenses

6,858

5,481

6,007

22,258

19,926

Total operating expenses

80,518

67,147

59,314

265,469

256,273

Operating income (loss)

30,512

35,647

19,807

120,103

(38,079)

Foreign exchange gain (loss)

(9,232)

(16,445)

1,064

(21,934)

(13,576)

Interest expenses

(9,100)

(7,878)

(8,975)

(34,886)

(48,445)

Interest income

795

874

770

2,793

3,958

Gain on change in fair value of derivative

1,677

1,392

729

3,422

2,180

Other income, net

940

2,210

729

7,250

8,696

Income (loss) before income taxes

15,592

15,800

14,124

76,748

(85,266)

Income tax (expense) benefit

(1,687)

(5,222)

1,134

(15,488)

13,030

Net income (loss)

13,905

10,578

15,258

61,260

(72,236)

(Income)/Loss attributable to the noncontrolling
interests

(3,290)

909

206

(1,922)

210

Net income attributable to Trina
Solar Limited

$ 10,615

$ 11,487

$ 15,464

$ 59,338

$ (72,026)

Earnings (loss) per ADS*

Basic

$ 0.13

$ 0.14

$ 0.22

$ 0.76

$ (1.01)

Diluted

$ 0.13

$ 0.14

$ 0.21

$ 0.74

$ (1.01)

Weighted average ADS outstanding*

Basic

84,105,526

81,685,868

71,064,192

77,630,080

71,071,055

Diluted

84,756,928

82,699,772

72,526,455

85,493,897

71,071,055

* "ADS" refers to any of our American depository shares, each representing 50 ordinary shares.

Trina Solar Limited

Unaudited Condensed Consolidated Statements of Comprehensive Income

(US dollars in thousands)

For the Three Months Ended

For the Year Ended

Dec. 31,

Sep. 30,

Dec. 31,

Dec. 31,

Dec. 31,

2014

2014

2013

2014

2013

Net income (loss)

$ 13,905

$ 10,578

$ 15,258

$ 61,260

$ (72,236)

Other comprehensive income (loss):

Foreign currency translation adjustments

907

4,507

2,856

2,377

6,197

Comprehensive income (loss)

14,812

15,085

18,114

63,637

(66,039)

Comprehensive (income)/ loss attributable to
non-controlling interests

(3,470)

945

207

(1,992)

209

Comprehensive income (loss) attributable to
Trina Solar Limited

$ 11,342

$ 16,030

$ 18,321

$ 61,645

$ (65,830)

Trina Solar Limited

Unaudited Condensed Consolidated Balance Sheets

(US dollars in thousands)

As of Dec. 31,

As of Sep. 30,

As of Dec. 31,

2014

2014

2013

ASSETS

Current assets:

Cash and cash equivalents

$ 392,893

$ 318,832

$ 486,686

Restricted cash

146,929

97,657

74,720

Inventories

350,852

451,529

244,532

Project assets held for development and sale

60,105

46,594

73,305

Accounts receivable, net

621,524

556,654

435,092

Current portion of advances to suppliers, net

50,250

51,019

68,253

Prepaid expenses and other current assets, net

150,793

160,892

139,113

Total current assets

1,733,346

1,683,177

1,521,701

Property, plant and equipment, net

1,253,543

1,096,438

889,752

(including solar projects held for development

and operation of $385,477, $226,854 and $48,149
as of each period-end, respectively)

Project assets held for development and sale

1,980

6,097

Land use rights, net

48,076

48,266

43,287

Advances to suppliers, net of current portion

20,751

34,096

41,908

Investment in equity affiliates

25,568

11,483

11,770

Deferred income tax assets, net

30,978

31,992

50,901

Other noncurrent assets

47,304

48,982

1,813

TOTAL ASSETS

$ 3,199,566

$ 2,956,414

$ 2,567,229

LIABILITIES AND EQUITY

Current liabilities:

Short-term borrowings, including current portion of
long-term borrowings

$ 820,252

$ 783,883

$ 935,590

Accounts payable

750,096

669,792

476,533

Accrued expenses and other current liabilities

179,455

155,234

128,420

Total current liabilities

$ 1,749,803

$ 1,608,909

$ 1,540,543

Long-term bank borrowings, excluding current portion

22,434

103,623

100,502

Convertible senior notes

287,500

172,500

Accrued warranty costs

103,197

96,363

81,743

Other noncurrent liabilities

35,553

21,398

21,962

Total liabilities

2,198,487

2,002,793

1,744,750

Ordinary shares

43

41

36

Additional paid-in capital

752,384

721,765

663,388

Retained earnings

202,707

192,092

143,369

Accumulated other comprehensive income

17,710

16,983

15,403

Total Trina Solar Limited shareholders’ equity

972,844

930,881

822,196

Non-controlling interests

28,235

22,740

283

Total equity

1,001,079

953,621

822,479

TOTAL LIABILITIES AND EQUITY

$ 3,199,566

$ 2,956,414

$ 2,567,229

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