-- First quarter net revenue exceeds guidance, up 133.5% year-over-year to
$89.9 million
-- Net income attributable to holders of ordinary shares up 97.7% to $19.3
million from fourth quarter 2005
-- Gross margin increases sequentially to 30.1% driven by higher PV module
prices and conversion efficiency improvements
-- Production capacity reaches 180MW
WUXI, China, May 18 /Xinhua-PRNewswire/ -- Suntech Power Holdings Co., Ltd.
(NYSE: STP), one of the world's leading manufacturers of photovoltaic (PV)
cells, today announced first quarter 2006 total net revenues of $89.9 million
and net income attributable to holders of ordinary shares of $19.3 million, or
$0.12 per diluted American Depository Share (ADS).
"During the quarter we continued to improve our solar cell conversion
efficiency rates while shifting more production to use thinner 210 micron
wafers. This helped us to improve profitability even while silicon wafer
prices continued to rise," said Dr. Zhengrong Shi, Suntech's chairman and CEO.
"We intend to continue to achieve profitable growth by lowering cost per watt
through our R&D efforts, increasing production capacity and expanding our
markets as more and more governments worldwide launch initiatives promoting
the use of solar energy."
First Quarter 2006 Results
Total net revenues for the first quarter of 2006 were $89.9 million, an
increase of 1.0% sequentially and 133.5% year-over-year. The modest sequential
growth rate reflected seasonality in production as there was approximately one
fewer working week during the first quarter compared to other quarters due to
the Chinese New Year holidays.
Breakdown of First Quarter 2006 Net Revenues
Q1 2006 % of Q1 Growth Growth
2006 Net vs. Q1 vs. Q4
Revenues 2005 2005
PV Cells $40.6 45.1 % +688 % +28 %
million
PV Modules $49.3 54.9 % +48 % (13%)
million
PV System $0.03 -- +128 % (95%)
Integration million
Total $89.9 100.0 % +134 % +1 %
million
During the first quarter of 2006, Suntech shipped total output of 26.8MW
and increased its annualized capacity from 150MW to 180MW. Average sales
prices of PV cells and PV modules were $3.05 and $3.65 per watt, respectively,
compared to $3.12 and $3.49 per watt, respectively, in the fourth quarter of
2005, and $2.63 and $3.29 per watt, respectively, in the first quarter of 2005.
Gross profit for the first quarter of 2006 was $27.1 million, representing
an increase of 14.7% over the fourth quarter of 2005 and 102.6% over the first
quarter of 2005. Gross margin for the first quarter of 2006 was 30.1% compared
to 26.5% in the fourth quarter of 2005 and 34.7% in the first quarter of 2005.
Sequentially, gross margins increased due to a rise in the price of PV modules
and improved conversion efficiencies. The year-over-year gross margin decrease
was primarily due to increases in the cost of raw materials as well as share
based compensation.
Operating expenses in the first quarter of 2006 were $7.0 million compared
to $11.0 million in the fourth quarter of 2005 and $2.0 million in the first
quarter of 2005. The sequential decrease in operating expenses were primarily
due to a decline in share based compensation to $2.3 million in the first
quarter of 2006 from $5.8 million in the fourth quarter of 2005, as well as
fourth quarter operating expenses including certain internal expenses
associated with Suntech's restructuring and December 2005 initial public
offering. The year-over-year increase in operating expenses reflected growth
in the business needed to support the Company's revenue growth as well as
share based compensation expenses.
Income from operations for the first quarter of 2006 was $20.1 million,
representing a sequential increase of 59.9% and a year-over-year increase of
76.9%. Operating margin was 22.3% compared to 14.1% in the fourth quarter of
2005 and 29.5% in the first quarter of 2005.
Net income attributable to holders of ordinary shares for the first
quarter of 2006 was $19.3 million, representing a 97.7% sequential increase
and a 93.3% increase year-over-year. Basic and diluted net income per ADS for
the first quarter of 2006 were $0.13 and $0.12, respectively, compared with
$0.10 and $0.08 in the fourth quarter of 2005, respectively. First quarter
2005 basic and diluted net income per ADS were both $0.11.
Net income attributable to holders of ordinary shares excluding share-
based compensation expenses (non-GAAP) for the first quarter of 2006 was $22.1
million, an increase of 31.4% from the fourth quarter of 2005, and a 121.6%
increase year-over-year. Basic and diluted net income per ADS excluding share-
based compensation expenses (non-GAAP) for the first quarter of 2006 were
$0.15 and $0.14, respectively. First quarter 2005 basic and diluted net income
per ADS excluding share-based compensation expenses (non-GAAP) were both $0.11.
(Please refer below to the reconciliation of GAAP net income and basic and
diluted net income per ADS to non-GAAP net income and basic and diluted net
income per ADS and a detailed discussion of management's use of non-GAAP
information.)
As of March 31, 2006, Suntech had cash and cash equivalents of $345.1
million.
Net operating cash outflow for the first quarter was $31 million primarily as
Suntech made advance payments to suppliers to secure silicon wafers. The
operating cash outflow in the first quarter of 2006 was also due to the
increase in inventory balance from $40.4 million as of December 31, 2005 to
$61.8 million as of March 31, 2006, as Suntech accumulated raw materials for
further production expansion. In the first quarter of 2006, depreciation was
$1.4 million and capital expenditures were $12.2 million.
Business Highlights
-- In the first quarter of 2006, Suntech's multicrystalline silicon PV
cell conversion efficiency rate, using solar grade raw material,
increased to 15.4% from 15.2%, and the Company maintained its
monocrystalline silicon PV cell conversion efficiency rate at 17.0%.
Suntech continued to expand its pilot production using 18.0% conversion
efficiency technology with solar grade silicon and is on-track to reach
20.0% conversion efficiency by 2008.
-- On May 1, 2006, Suntech announced that it had received Underwriters
Laboratories (UL) certification, which would expand its ability to sell
products into the United States, one of the world's largest solar
markets.
-- Also on May 1, 2006, Suntech broke ground for its additional
manufacturing site in Wuxi, China, which is planned to have more than
66,000 square meters of floor space. The Company anticipates that the
new building will be ready for equipment installation in early 2007.
-- Suntech's capacity expansion remains on schedule. The Company added an
additional 30MW production line that began to ramp production in April.
The Company anticipates reaching 240MW annualized capacity by the end
of the third quarter 2006.
-- In the first quarter of 2006, Suntech won system integration contracts
in China for a total of approximately 2.2MW.
Additional Senior R&D Staff
In the first quarter of 2006, Suntech continued to build its R&D
capabilities, adding key members to its senior staff:
-- Dr. Tihu Wang joined Suntech as vice general manager of R&D. Dr. Wang
has 23 years of experience in leading and conducting advanced
scientific research on high-efficiency solar cells, semiconductor
crystal growth, material characterizations, and physical metallurgy.
Prior to joining Suntech, Dr. Wang worked at the U.S. National
Renewable Energy Laboratory where he acquired extensive expertise in
the entire line of silicon photovoltaic technology, from silicon
feedstock production, crystal growth and solar cell manufacturing, to
thin-film silicon fabrication.
-- Mr. Guangchun Zhang, was named Suntech's deputy research director of
R&D. Mr. Zhang, who has been with Suntech since November 2005,
specializes in research on high-efficiency solar cell design. He
previously worked at the Centre for Photovoltaic Engineering and the
School for Photovoltaic Engineering at the University of New South
Wales in Australia.
Outlook for Second Quarter 2006
Suntech expects its total net revenues in the second quarter of 2006 to be
in the range of $110 million to $117 million, representing year-over-year
growth of 163% to 179%.
Suntech expects its total production output to be in the range of 31MW to
33MW in the second quarter of 2006. Suntech continues to expect its total
production output to be between 130MW to 140MW for the full year 2006.
Conference Call Information
Suntech's earnings announcement conference call will take place on May 18,
2006 at 8:00 a.m., Eastern Time, which corresponds to May 18, 2006 at 8:00
p.m., Beijing/Hong Kong time. To access the conference call, please dial +1-
617-213-8898 (in the U.S.) or +852 3002 1672 (in Hong Kong) and ask to be
connected to the Suntech earnings call.
A live webcast of the conference call will be available on the investor
relations section of Suntech Power's website at http://www.suntech-power.com.
A replay of the conference call will be available for two weeks on the
investor relations section of Suntech Power's website or by dialing +1 617 801
6888 (passcode: 66462243).
About Suntech Power Holdings Ltd.
Suntech Power Holdings Co., Ltd. is a leading solar energy company in the
world as measured by production output of solar cells in 2005. Suntech
provides solar solutions for a green future. Suntech designs, develops,
manufactures and markets a variety of high quality, cost effective and
environmentally friendly PV cells and modules for electric power applications
in the residential, commercial, industrial and public utility sectors.
Suntech's customers are located in various markets worldwide, including
Germany, Spain, China and the United States. For more information, please
visit http://www.suntech-power.com.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements
are made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements. Among
other things, the business outlook and quotations from management in this
announcement, as well as Suntech's strategic and operational plans, contain
forward-looking statements. Suntech may also make written forward-looking
statements in its periodic reports to the U.S. Securities and Exchange
Commission on forms 20-F and 6-K, etc., in its annual report to shareholders,
in press releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements that are not
historical facts, including statements about Suntech's beliefs and
expectations, are forward-looking statements. Forward-looking statements
involve inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any forward-
looking statement, including but not limited to the following: expectations
regarding the worldwide demand for electricity and the market for solar energy;
Suntech's beliefs regarding the effects of environmental regulation, the lack
of infrastructure reliability and long-term fossil fuel supply constraints;
the importance of environmentally friendly power generation; expectations
regarding governmental support for the deployment of solar energy;
expectations regarding the scaling of Suntech's manufacturing capacity;
expectations with respect to Suntech's ability to secure raw materials in the
future; future business development, results of operations and financial
condition; and competition from other manufacturers of PV products and
conventional energy suppliers. Further information regarding these and other
risks is included in Suntech's registration statement on Form F-1, as amended,
filed with the U.S. Securities and Exchange Commission. Suntech does not
undertake any obligation to update any forward-looking statement, except as
required under applicable law.
About Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance
with GAAP, Suntech uses the following non-GAAP measures which are adjusted
from the most directly comparable GAAP results to exclude only items related
to share-based compensation. Management uses these non-GAAP measures
internally to make an apples-to-apples comparison of the business and
financial performances of first quarter 2006 versus first quarter 2005 for
strategic decision making, forecasting future results and evaluating the
Company's current performance. Many analysts covering Suntech use the non-GAAP
measures as well. Management believes these non-GAAP measures are useful to
investors in enabling them to better assess changes in Suntech's core business
across different time periods. These non-GAAP measures are not in accordance
with or an alternative for GAAP financial data and may be different from non-
GAAP measures used by other companies. Suntech computes its non-GAAP financial
measures using the same consistent method from quarter to quarter. For more
information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures" set forth at the end of this release.
SUNTECH POWER HOLDINGS CO., LTD.
CONSOLIDATED INCOME STATEMENTS
(In $'000, except share, per share, and per ADS data)
2005 2005 2006
Q1 Q4 Q1
(Note) (Note) (Note)
Net revenues 38,497 88,989 89,886
Total cost of revenues 25,144 65,407 62,834
Gross profit 13,353 23,582 27,052
Operating expenses
Selling expenses 737 946 1,010
General and administrative
expenses 1,098 8,008 4,904
Research and development
expenses 179 2,084 1,078
Income from operations 11,339 12,544 20,060
Interest expenses (359) (773) (857)
Interest income 56 174 1,471
Other income (expense) 100 (105) 194
Income before income taxes 11,136 11,840 20,868
Tax provision (1,132) (1,500) (1,589)
Net income after taxes before
minority interest and equity
in earnings of affiliates 10,004 10,340 19,279
Minority interest -- (29) 16
Equity in (loss) earnings
of affiliates (12) 244 24
Net income 9,992 10,555 19,319
Deemed dividend on Series A
redeemable convertible
preferred shares -- 784 --
Net income attributable to
holders of
ordinary shares 9,992 9,771 19,319
Net income per share and
per ADS:
-- Basic 0.11 0.10 0.13
-- Diluted 0.11 0.08 0.12
Shares used in computation
-- Basic 90,000,000 98,123,263 147,487,707
-- Diluted 90,000,000 132,872,799 156,220,705
Note: The quarterly summary statement of operations data are unaudited.
The summary consolidated balance sheet data as of March 31, 2006 is derived
from Suntech's unaudited consolidated financial statements. The summary
consolidated balance sheet as of December 31, 2005 is derived from Suntech's
audited consolidated financial statements.
About Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance
with GAAP, Suntech uses the following non-GAAP measures which are adjusted
from the most directly comparable GAAP results to exclude only items related
to share-based compensation. Management uses these non-GAAP measures
internally to make an apples-to-apples comparison of the business and
financial performances of first quarter 2006 versus first quarter 2005 for
strategic decision making, forecasting future results and evaluating the
Company's current performance. Many analysts covering Suntech use the non-GAAP
measures as well. Management believes these non-GAAP measures are useful to
investors in enabling them to better assess changes in Suntech's core business
across different time periods. These non-GAAP measures are not in accordance
with or an alternative for GAAP financial data and may be different from non-
GAAP measures used by other companies. Suntech computes its non-GAAP financial
measures using the same consistent method from quarter to quarter. For more
information on these non-GAAP financial measures, please see the tables
captioned "Reconciliations of non-GAAP results of operations measures to the
nearest comparable GAAP measures" set forth at the end of this release.
Three months ended March
31, 2005
GAAP Adjustment Non-GAAP
Result Results Results
Gross Profit 13.4 0 13.4
Gross Margin 34.7 % 34.7 %
Income from Operations 11.3 0 11.3
Income from Operations
Margin 29.5 % 29.5 %
Net Income attributable
to holders of ordinary
shares 10.0 0 10.0
Net Income Margin 26.0 % 26.0 %
Net Income per share
and per ADS
-- Basic 0.11 0.11
-- Diluted 0.11 0.11
Three months ended
December 31,
2005
GAAP Adjustment Non-GAAP
Result Results
Gross Profit 23.6 1.2 24.8
Gross Margin 26.5 % 27.9 %
Income from Operations 12.5 7.1 19.6
Income from Operations
Margin 14.1 % 22.0 %
Net Income attributable
to holders of ordinary
shares 9.8 7.1 16.8
Net Income Margin 11.0 % 18.9 %
Net Income per share
and per ADS
-- Basic 0.10 0.17
-- Diluted 0.08 0.13
Three months ended March
31, 2006
GAAP Adjustment Non-GAAP
Result Results
Gross Profit 27.1 0.5 27.6
Gross Margin 30.1 % 30.7 %
Income from Operations 20.1 2.8 22.9
Income from Operations
Margin 22.3 % 25.5 %
Net Income attributable
to holders of ordinary
shares 19.3 2.8 22.1
Net Income Margin 21.5 % 24.6 %
Net Income per share
and per ADS
-- Basic 0.13 0.15
-- Diluted 0.12 0.14
(*) The adjustment is only for share-based compensation.
For more information, please contact:
In China:
Cindy Shao
Suntech Power Holdings Ltd.
Tel: +86-510-8534-5000
Email: ir@suntech-power.com
Philip Lisio
Ogilvy Public Relations Worldwide
Tel: +86-10-8520-6550
Mobile: +86-1350-1166-560
Email: philip.lisio@ogilvy.com
In the United States:
Thomas Smith
Ogilvy Public Relations Worldwide
Tel: +1-212-880-5269
Email: thomas.smith@ogilvypr.com
SOURCE Suntech Power Holdings Co., Ltd.
-0- 05/18/2006
/CONTACT: In China - Cindy Shao of Suntech Power Holdings Ltd., +86-510-
8534-5000, or ir@suntech-power.com , or Philip Lisio of Ogilvy Public
Relations Worldwide, +86-10-8520-6550, or mobile, +86-1350-1166-560, or
philip.lisio@ogilvy.com , In the United States - Thomas Smith of Ogilvy Public
Relations Worldwide, +1-212-880-5269, or thomas.smith@ogilvypr.com /
(STP)
CO: Suntech Power Holdings Co., Ltd.
ST: China
IN: CPR
SU: ERN CCA
YM
-- CNTH019 --
1637 05/18/2006 08:00 EDT http://www.prnewswire.com
