LDK Solar Co., Ltd. (“LDK Solar”; NYSE: LDK), a leading vertically integrated manufacturer of photovoltaic products, today reported its unaudited financial results for the second quarter ended June 30, 2012.
All financial results are reported in U.S. dollars on a U.S. GAAP basis.
Second Quarter Highlights:
- Net sales of $235.4 million;
- Shipped 316.7 megawatts (MW) of wafers, 135.6 MW of cells and modules in the second quarter;
- Produced a total of approximately 538.1 metric tons (MT) of polysilicon during the second quarter; and
- Produced a total of approximately 90.8 MW of cells during the second quarter.
Net sales for the second quarter of fiscal 2012 were $235.4 million, compared to $200.1 million for the first quarter of fiscal 2012, and $499.4 million for the second quarter of fiscal 2011.
Gross loss for the second quarter of fiscal 2012 was $92.0 million, compared to gross loss of $131.0 million in the first quarter of fiscal 2012, and gross profit of $11.0 million for the second quarter of fiscal 2011.
Gross margin for the second quarter of fiscal 2012 was negative 39.1%, compared to negative 65.5% in the first quarter of fiscal 2012, and positive 2.20% in the second quarter of fiscal 2011.
During the preparation of its second quarter 2012 financial results, LDK Solar’s management determined that an inventory write-down and a provision for firm purchase commitment totaling $35.1 million was required as a result of the relatively high production cost of polysilicon in the second quarter and a continuous drop in the market price for polysilicon, wafers, cells and modules. As a result, gross margin and results from operations were negatively impacted in the second quarter of fiscal 2012.
Loss from operations for the second quarter of fiscal 2012 was $172.7 million, compared to loss from operations of $135.8 million for the first quarter of fiscal 2012, and loss from operations of $47.9 million for the second quarter of fiscal 2011. As a part of our liquidity plan, LDK Solar entered into several sales agreements to sell some of its real estate properties and land use rights to local government authorities during the second quarter of 2012. As a result, $30.5 million of impairment loss for property, plant and equipment was recorded for the excess of book value to sales price.
Operating margin for the second quarter of fiscal 2012 was negative 73.4% compared to negative 67.9% in the first quarter of fiscal 2012, and negative 9.6% in the second quarter of fiscal 2011.
Income tax benefit for the second quarter of fiscal 2012 was $23.7 million, compared to income tax benefit of $15.6 million in the first quarter of fiscal 2012 and income tax expense of $6.7 million in the second quarter of fiscal 2011.
Net loss available to LDK Solar’s shareholders for the second quarter of fiscal 2012 was $254.3 million, or a loss of $2.00 per diluted ADS, compared to a net loss of $185.2 million, or a loss of $1.46 per diluted ADS for the first quarter of fiscal 2012 and net loss of $87.7 million, or a loss of $0.62 per diluted ADS for the second quarter of fiscal 2011. The number of shares for calculating diluted ADS was approximately 127.2 million for the second quarter of fiscal 2012.
During the second quarter of 2012, LDK Solar recorded $12 million expense in interest expense related to the unrecorded fair value change of certain interest rate swap contracts entered into in prior years. LDK Solar performed SAB 108 analysis and does not believe that the misstatement described above is material to LDK Solar’s results of operations, financial position or cash flows for any of its financial statements previously filed and for the year ending December 31, 2012. Accordingly, LDK Solar corrected the misstatement in the second quarter of 2012 with no adjustment to previously filed financial statements.
LDK Solar ended the second quarter of fiscal 2012 with $296.2 million in cash and cash equivalents and $523.4 million in short-term pledged bank deposits.
“For the second quarter of 2012, our revenue was within the expected range as we saw wafer shipments increase sequentially,” stated Xiaofeng Peng, Chairman and CEO of LDK Solar. “Industry-wide competition and demand constraints continued to drive price declines across the entire solar supply chain and negatively impacted our margins and profitability.
“Turning to the third quarter, our outlook remains cautious as we expect to see continued near-term challenges facing our industry. We remain closely focused on managing costs and operating expenses through streamlining manufacturing operations, reducing production costs and improving utilization.
“We continue to believe that some markets such as China will begin to see improved demand in the second half of this year and expect growth opportunities in this market to continue to expand over the next several years,” concluded Mr. Peng.
Business Outlook
The following statements are based upon management’s current expectations. These statements are forward-looking in nature, and the actual results may differ materially. You should read the “Safe Harbor Statement” below with respect to the risks and uncertainties relating to these forward-looking statements.
For the third quarter of fiscal 2012, LDK Solar estimates its revenue to be in the range of $220 million to $260 million, wafer shipments between 190 MW and 240 MW, cells and module shipments between 140 MW and 180 MW.
For fiscal 2012, LDK Solar estimates its revenue to be in the range of $1.1 billion to $1.5 billion, polysilicon shipments between 1,100 MT and 1,400 MT, wafer shipments between 0.9 gigawatts (GW) and 1.2 GW, cell and module shipments between 550 MW and 750 MW and inverter shipments between 170 MW to 210 MW. LDK Solar expects PV system project construction to be in the range of 200 MW to 300 MW and to recognize between 110 MW and 150 MW through project sales and EPC services for 3rd party customers.
Conference Call Details
The LDK Solar Second Quarter 2012 teleconference and webcast is scheduled to begin at 8:00 a.m. Eastern Time (ET), on September 17, 2012. To listen to the live conference call, please dial 877-941-1427 (within U.S.) or 480-629-9664 (outside U.S.) at 8:00 a.m. ET on September 17, 2012. An audio replay of the call will be available through September 27, 2012, by dialing 800-406-7325 (within U.S.) or 303-590-3030 (outside U.S.) and entering the pass code 4563604#.
A live webcast of the call will be available on the company’s investor relations website at http://investor.ldksolar.com.
LDK Solar Co., Ltd.
Unaudited Condensed Consolidated Balance Sheet Information
(In US$’000)
| 06/30/2012 | 03/31/2012 | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 296,193 | 135,699 | ||
| Pledged bank deposits | 523,383 | 603,346 | ||
| Trade accounts and bills receivable, net | 342,174 | 485,316 | ||
| Inventories | 467,148 | 555,293 | ||
| Prepayments to suppliers, net | 37,035 | 38,436 | ||
| Other current assets | 350,320 | 312,182 | ||
| Total current assets | 2,016,253 | 2,130,272 | ||
| Property, plant and equipment, net | 3,728,797 | 3,828,231 | ||
| Deposits for purchases of property, plant and equipment and land use rights | 169,442 | 153,368 | ||
| Land use rights | 285,214 | 307,902 | ||
| Prepayments to suppliers expected to be utilized beyond one year, net | 9,519 | 10,365 | ||
| Pledged bank deposits – non-current | 30,713 | 43,955 | ||
| Investments in associates and a jointly-controlled entity | 11,893 | 65,025 | ||
| Other non-current assets | 149,407 | 98,090 | ||
| Total assets | 6,401,238 | 6,637,208 | ||
| Liabilities and equity | ||||
| Current liabilities | ||||
| Short-term borrowings and current installments of long-term borrowings | 2,430,973 | 2,250,841 | ||
| Trade accounts and bills payable | 1,032,861 | 1,249,928 | ||
| Advance payments from customers, current installments |
181,823 |
218,639 |
||
| Accrued expenses and other payables | 783,859 | 719,886 | ||
| Convertible senior notes, less debt discount – current | 23,755 | – | ||
| Other financial liabilities | 65,221 | 54,169 | ||
| Total current liabilities | 4,518,492 | 4,493,463 | ||
| Long-term borrowings, excluding current installments |
854,172 |
889,879 |
||
| RMB-denominated US$-settled senior notes, less debt discount and Convertible senior notes – non-current | 257,870 | 282,854 | ||
| Advance payments from customers – non-current | 101,033 | 112,093 | ||
| Other liabilities | 223,055 | 183,373 | ||
| Total liabilities | 5,954,622 | 5,961,662 | ||
| Redeemable non-controlling interests | 254,444 | 228,218 | ||
| Equity | ||||
| Total LDK Solar Co., Ltd. shareholders’ equity | 171,917 | 432,487 | ||
| Non-controlling interests | 20,255 | 14,841 | ||
| Total equity | 192,172 | 447,328 | ||
| Total liabilities and equity | 6,401,238 | 6,637,208 | ||
LDK Solar Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations Information
(In US$’000, except per ADS data)
|
For the 3 Months Ended |
||||
|
|
06/30/2012 | 03/31/2012 | ||
| Net sales | 235,361 | 200,103 | ||
| Cost of goods sold | (327,356) | (331,137) | ||
| Gross loss | (91,995) | (131,034) | ||
| Selling expenses | (11,043) | (9,168) | ||
| General and administrative expenses | (34,410) | 11,212 | ||
| Research and development expenses | (4,707) | (6,848) | ||
| Impairment loss for property, plant and equipment | (30,504) | – | ||
| Total operating expenses | (80,664) | (4,804) | ||
| Loss from operations | (172,659) | (135,838) | ||
| Other income (expenses): | ||||
| Interest income | 3,414 | 2,386 | ||
| Interest expense and amortization of debt issuance costs and debt discount | (75,547) | (65,805) | ||
| Foreign currency exchange (loss) gain, net | (6,913) | 1,009 | ||
| Others, net | (435) | 5,490 | ||
| Loss before income tax | (252,140) | (192,758) | ||
| Income tax benefit | 23,707 | 15,600 | ||
| Net loss | (228,433) | (177,158) | ||
| Loss attributable to non-controlling interests | 1,037 | 338 | ||
| Loss attributable to redeemable non-controlling interests | 6,082 | 7,497 | ||
| Net loss attributable to LDK Solar Co., Ltd. shareholders |
(221,314) |
|
(169,323) |
|
| Accretion to redemption value of redeemable non-controlling interests | (33,027) | (15,846) | ||
| Net loss available to LDK Solar Co., Ltd. shareholders | (254,341) | (185,169) | ||
| Net loss per ADS, Diluted | $ (2.00) | $ (1.46) | ||
|
|
|
|
||
|
Unaudited Condensed Consolidated Statement |
||||
|
|
|
|
||
| Net loss |
(228,433) |
|
(177,158) |
|
| Other comprehensive (loss) income |
|
|
|
|
| Foreign currency exchange translation adjustment, net of nil tax |
(6,486) |
|
4,614 |
|
| Fair value changes in available-for-sale equity security, net of tax effect |
(2,693) |
|
605 |
|
| Comprehensive loss |
(237,612) |
|
(171,939) |
|
| Less: comprehensive loss attributable to noncontrolling interests |
(1,368) |
|
(326) |
|
| Less: comprehensive loss attributable to redeemable noncontrolling interests |
(6,801) |
|
(7,322) |
|
|
|
|
|
||
| Comprehensive loss attributable to LDK Solar Co., Ltd. shareholders |
(229,443) |
|
(164,291) |
|
, a leading vertically integrated manufacturer of photovoltaic products, today reported its unaudited financial results for the second quarter ended June 30, 2012.…){kind=link}