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)

Shipment breakdown by region (percentage)

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.