Solar project developer and operator ReneSola Ltd (NYSE:SOL) booked better-than-expected financial results in the third quarter of 2022 but some unexpected costs due to a strategy shift in Europe triggered it to cut its full-year revenue and profit outlook.
The company said on Thursday it sees its 2022 revenues in the range of USD 85 million to USD 90 million, instead of the previous forecast of USD 100 million-USD 120 million. Net income is now expected to total USD 7 million-USD 8 million, down from the USD 9 million-10 million projected earlier.
The lower forecast is a result of ReneSola's decision not to sell a 110-MW portfolio of projects in Poland and Hungary and operate them instead in its European independent power producer (IPP) portfolio. Due to this shift in strategy, ReneSola will forgo some USD 20 million in revenue and USD 5 million- USD 6 million (EUR 5.7m) in net income in the last quarter of 2022.
Still, the company revised upwards its gross margin forecast to 25%-30% from 20%-25%.
ReneSola closed the July-September quarter with results that significantly outperformed its guidance, saying this was one of its best quarters in the past three years. The company earned USD 3 million net on a GAAP basis, emerging from a second-quarter loss of USD 204,000 and registering an over-fourfold increase in annual terms.
At USD 28.9 million, revenues jumped by 86% year-on-year and exceeded the high end of its forecast fuelled by the solid performance of its project development business in the US and commercial IPP assets in China, coupled with contributions from engineering, procurement and construction (EPC) operations in Poland. The IPP and EPC segments each accounted for 39% of the total revenues, while project development brought 22%. By region, Europe was responsible for 56% of the group’s overall revenues.
GAAP gross profit amounted to USD 8.5 million, rising from USD 6.1 million a year back, with gross margin coming in at 29.6%, above the guidance.
ReneSola noted that its strong third-quarter results were achieved in a challenging economic environment, which dented its revenues and earnings from Europe and China by some USD 3 million. More details about the company’s performance are available in the table.
| Amounts in USD millions |
Q3 2022 |
Q3 2021 |
| Revenue |
28.9 |
15.5 |
| GAAP gross profit |
8.5 |
6.1 |
| Non-GAAP operating profit (loss) |
5 |
2.7 |
| Adjusted EBITDA |
7.1 |
4.5 |
| Net profit (loss) attr. to ReneSola |
3 |
0.7 |
|
Non-GAAP net profit (loss) attr. to ReneSola
|
3.4 |
1.7 |
Non-GAAP net profit (loss) attr. to ReneSola
ReneSola achieved its goal for a mid-to-late stage pipeline of 3 GW and will now seek to expand it to 4 GW by the end of 2024, expecting its European business to have a significant contribution. The new goal comes a month after the company acquired UK-based Emeren Ltd, which develops solar and battery projects in Europe and has a pipeline of over 2.5 GW at different stages of development.
(USD 1.0 = EUR 0.950)
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