Trina Solar Beats on Q1 Earnings, Shares Climb - Analyst Blog

Solar photovoltaic (“PV”) module manufacturer Trina Solar Ltd. TSL reported earnings of 37 cents per American Depository Shares ADS in the first quarter of 2014 as against a loss of 90 cents per ADS in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by a whopping 3700.0%. The higher-than-expected earnings propelled the shares by 30.9% on May 21, 2014.

This not only reversed the year-ago loss but also marked the third quarterly profit in a row. The upside was driven by an increase in solar panel prices and higher shipments.

Total Revenue

Trina Solar posted revenues of $444.8 million in the first quarter, up 70.9% from the prior-year quarter owing to higher shipment volume. However, the quarterly figure missed the Zacks Consensus Estimate of $486.0 million by 8.5% and was down 15.4% sequentially primarily due to a seasonal slowdown in China.

Shipments

Solar module shipments in the reported quarter totaled 558.0 megawatts (“MW”), compared with 392.6 MW in the year-ago quarter. This was attributable to increasing demand from prime geographical regions, mainly China, Japan and the U.S. However, shipments decreased from 770.1 MW in the sequentially preceding period.

Operational Update

Gross profit in the first quarter was $91.5 million, much higher than the year-ago gross profit of $4.4 million and $79.1 million in the last quarter. The year-over-year increase was primarily due to higher average selling prices of modules. The sequential increase mainly reflects higher priced markets, mainly Japan, and sustained efforts in cost control.

Total operating expenses were $53.3 million in the quarter, down 10.2% sequentially but up 19.7% from the year-ago level.

Trina Solar reported an operating income of $38.2 million in the quarter under review versus an operating loss of $40.1 million in the comparable year-ago quarter.

Interest expense was $8.7 million, lower than $13.2 million incurred in the year-ago period.

Financial Update

As of Mar 31, 2014, cash and restricted cash were $577.7 million, higher than $561.4 million as of Dec 31, 2013.

Long-term debt as of Mar 31, 2014, was $105.4 million, up from $100.5 million as of Dec 31, 2013.

Guidance

Trina Solar expects shipments in the range of 950 MW to 1,010 MW in the second quarter of 2014. Of the total, 150 MW to 170 MW is slated for shipments to its downstream PV projects. Gross margin will likely be in the mid-teens percentage range.

Guidance for total annual shipments is maintained in the range of 3.6 GW to 3.8 GW and 400 MW to 500 MW of PV modules will be shipped to its downstream projects.

Zacks Rank

The company presently holds a Zacks Rank #1 (Strong Buy). Other stocks to look out for in the space are JA Solar Holdings Co. Ltd. JASO, ReneSola Ltd. SOL and Yingli Green Energy Holding Co. Ltd. YGE. While JA Solar sports a Zacks Rank #1 (Strong Buy), ReneSola and Yingli carry a Zacks Rank #2 (Buy).