EX-99.2 3 tm2030168d1_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2 

 

 

 

August 27, 2020

 

Dear Shareholders,

 

Second quarter results demonstrated solid execution and operational excellence in a challenging environment. We grew revenue by 93% y/y during the quarter, gross margin of 28.4% exceeded the updated guidance we announced on August 6th, and importantly, we returned to profitability with net income of $3.1 million.

 

Our solid financial performance was driven by outstanding operating results. First, we announced the sale of a 10.4 MW Minnesota community solar portfolio to Nautilus Solar Energy. Second, we connected 15 MW of “micro projects” in Hungary. Third, we agreed to participate in a consortium to develop a large-scale ground-mounted solar plant in the south of France.

 

In addition to solid top-line and bottom-line results, we strengthened our financial position through debt reduction and a capital raise. Foremost, we are committed to generating cash and paying down debt. We generated over $5 million in cash from operations and strengthened our balance sheet in the second quarter by reducing total debt by nearly $8 million. This was remarkable considering the challenging macro environment we face as a result of the ongoing COVID-19 global pandemic. Subsequent to quarter end, we further strengthened the balance sheet with a capital raise. We implemented an “at-the-market” (ATM) equity offering program, under which we are selling up to an aggregate of $5 million of ReneSola Power’s common stock. We plan to use the net proceeds to expand our new project pipeline and for general working capital purposes. Additionally, the capital infusion will enable us to execute our long-term strategic growth plan as we further consolidate our transformation into an asset-light solar developer.

 

Further advancing our growth plan, this week we announced a definitive agreement to acquire certain assets from an undisclosed reputable solar developer in the U.S. The acquisition will also add an experienced solar project development team and should solidify our position as a leading global solar energy developer and operator. We believe that these new project assets being acquired are highly complementary to our existing business. In particular, the new team brings expertise in the development of U.S. distributed generation and small-scale utility projects with battery storage, which should augment our historical strength in U.S. community solar and European DG.

 

Once completed, the transaction is expected to immediately increase our total solar project pipeline in the U.S. by approximately 200 MW. In addition, the acquisition provides ReneSola Power with access to utility projects and development activities in a number of states, including Pennsylvania, California, New York, Maine, Illinois and Arizona. By leveraging our global reach and experience with the new team's solid track record in the U.S., we are expanding the scale of our solar energy development platform. We look forward to capturing potential market opportunities while driving value for all stakeholders.

 

We are optimistic about multi-year growth prospects. In the rest of this letter, I will remind you of why we are excited about our future.

 

Large Market Opportunity

 

The global solar power project development business is large yet continues to grow. Industry market research estimates that by 2040, the share of renewables in the energy market will increase to around 30% and will become the single largest source globally of power generation. Europe continues to lead the way in terms of penetration of renewables. Renewable energy is expected to account for more than 50% of the European energy market by 2040. Both Europe and the U.S. are expected to be the two key markets driving the growth of renewables in the next several years. With our focus on the U.S. and European markets (primarily Poland, Hungary, Spain, France, and the U.K.), we believe we are strategically positioned for growth.

 

 

 

 

 

 

Our Project Development business benefits from an intense focus on small-scale projects in diverse jurisdictions with a high PPA/FiT price that generate attractive returns. As of June 30, 2020, our total project pipeline was approximately 700 MW, and our late-stage pipeline was approximately 500 MW, up from 423 MW last quarter. We continue to focus on profitable markets, including the U.S. and Europe, where we see tremendous growth opportunities with high-quality projects. Importantly, we intend to add incremental project pipeline in our core markets (the U.S., U.K., Spain, Poland, France, Germany and Hungary) to reach 1GW by the end of 2020. Our teams around the world are dedicated to our success, possessing excellent skills and years of industry experience. In addition, we believe our healthy balance sheet provides a strong foundation to fund growth.

 

 

Second Quarter 2020 Highlights

 

   Q2’20
($ millions)
   Q2’19
($ millions)
   Y/Y
Change
 
Revenue  $26.2   $13.6    +93%
Gross Profit  $7.4   $10.5    -29%
Non-GAAP Operating Income  $6.0   $9.0    -34%
Adjusted EBITDA  $7.6   $10.4    -27%
Non-GAAP net income attributed to ReneSola Ltd  $3.6   $5.0    -28%

 

   Q2’20
($ millions)
   Q1’20
($ millions)
   Q/Q
Change
 
Revenue  $26.2   $21.2    +24%
Gross Profit  $7.4   $1.4    +429%
Non-GAAP Operating Income (loss)  $6.0   $(0.7)   N/A 
Adjusted EBITDA  $7.6   $0.9    +744%
Non-GAAP net income(loss) attributed to ReneSola Ltd  $3.6   $(2.0)   N/A 

 

·Revenue was $26.2 million, ahead of the updated guidance of more than $25 million;
o$18.7 million from the Project Development business
o$7.4 million from the IPP business, primarily from the sale of electricity in China
·Gross margin was 28.4%, compared to 6.4% in Q1 2020 and 77.3% in Q2 2019;
·Non-GAAP1 net income attributed to ReneSola Ltd was $3.6 million, compared to non-GAAP net loss of $2.0 million in Q1 2020 and non-GAAP net income of $5.0 million in Q2 2019;
·During the second quarter of 2020, we connected 15 MW of “micro projects” in Hungary.

  

Attractive Profit-Optimized Project Pipeline

 

 

 

The development pipeline is strong at around 700 MW, of which over 500 MW are late-stage projects and about 23 MW are under construction. We believe the profile of this pipeline is attractive due to its broad geographic diversification in Europe.

 

Late-stage projects include those with the legal right to develop based on definitive agreements, including those held by project Special Purpose Vehicles (“SPVs”) or joint-venture project SPVs whose controlling power belongs to us.

 

 

1 Reconciliations to U.S. generally accepted accounting principles (“GAAP”) financial measures from non-GAAP financial measures are presented below under “Use of Non-GAAP Financial Measures” in Appendix 4.

 

 

 

 

 

 

The following table highlights our late-stage project pipeline by location:

 

Project
Location
  Late-stage
(MW)
   Under
Construction
(MW)
 
US   167.8    -- 
Poland   69.0    11.0 
Hungary   12.3    12.3 
France   71.5    -- 
Spain   36.0    -- 
Germany   50.0    -- 
U.K.   100.0    -- 
Total   506.6    23.3 

 

 Strong Performance and Outlook around the World

 

United States

 

Our late-stage projects total 168 MW, of which ~53 MW are community solar projects in Minnesota, Maine and New York. Additionally, we have projects under development in Utah, Florida, and Maine. Meanwhile, we operate 24.1 MW of utility projects in North Carolina.

 

US: Late-stage
Pipeline
  Location  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Utah  UT   10.5  DG  Development  2020  Project Development
MN-VOS  MN  1.4  Community Solar  Development  2020/2021  Project Development
MN-VOS-2  MN  8.4  Community Solar  Development  2020/2021  Project Development
New York  NY  25.7  Community Solar  Development  2020/2021  Project Development
Florida  FL  104.0  Utility Scale  Development  2021  Project Development
Maine  ME  17.8  DG& Community Solar  Development  2021  Project Development
   Total  167.8            

 

Poland

 

As of June 30, 2020, we had total projects of 69 MW in our development pipeline.

 

Poland: Late-stage
Pipeline
  Location  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Auction 2019 Dec  Poland  19.0  Ground-mounted  Under Development  2020/2021     Build-Transfer
Auction 2020 Q4  Poland  50.0  Ground-mounted  Under Development  2020/2021     Build-Transfer
Total     69.0            

 

Hungary

 

In Hungary, we invest in small-scale DG projects. Our late-stage pipeline has multiple “micro projects,” with an average size of 0.5 MW per project, bringing total capacity to 12.3 MW. All of the late-stage projects are under construction and expected to be connected to the grid in the fourth quarter of 2020.

 

Hungary: Late-stage
Pipeline
  Location  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Portfolio of “Micro PPs,” 0.5 MW each  Hungary  12.3  DG  Ready to build  2020  Build-Transfer
Total     12.3            

 

 

 

 

 

 

France

 

In France, we have a project pipeline of 71.5 MW, all of which are ground-mounted projects. Additionally, one of these ground-mounted projects is a 30 MW solar park we are developing with our strategic partner, Green City Energy.

 

France: Late-stage
Pipeline
  Location  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Project 1  France   30.0  Ground-mounted  Development  2021/2022  Project Development
Project 2  France  4.0  Ground-mounted  Development  2021/2022  Project Development
Project 3  France  4.5  Ground-mounted  Development  2021/2022  Project Development
Project 4  France  3.0  Ground-mounted  Development  2021/2022  Project Development
AMI Aups / Tenergie  France  30.0  Ground-mounted  Development  2021/2022  Project Development
Total     71.5            

 

Spain

 

We have a late-stage pipeline of 36 MW of ground-mounted projects primarily located in the Murcia and Alicante regions.

 

Spain: Late-stage Pipeline  Location  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Caravaca  Murcia, Spain    6.0  Ground-mounted  Under Development  2020  Build-Transfer
Altajero  Murcia, Spain        6.0  Ground-mounted  Under Development  2020  Build-Transfer
Project 1  Alicante, Spain        4.0  Ground-mounted  Under Development  2020/2021  Build-Transfer
Project 2  Alicante, Spain        10.0  Ground-mounted  Under Development  2020/2021  Build-Transfer
Project 3  Alicante, Spain        10.0  Ground-mounted  Under Development  2020/2021  Build-Transfer
Total     36.0            

 

Germany

We have secured a late-stage pipeline of 50 MW of ground-mounted projects which are under development.

 

Project Pipeline  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
Germany      50.0  Ground-mounted  Under Development  2020/2021  Build-Transfer
Total  50.0            

 

 

U.K.

We have a late-stage pipeline of 100 MW of ground-mounted projects which are under development.

 

Project Pipeline  Capacity
(MW)
  Project Type  Status  Expected
COD
  Business Model
UK  50.0  Ground-mounted  Under Development  2021  Project Development
UK      50.0  Ground-mounted  Under Development  2021  Project Development
Total  100.0            

 

 

 

 

 

 

 

 

 

 

Operating Assets and Completed Projects for Sale

 

We currently own 204 MW of operating projects. Of the 204 MW of assets, we operate 160 MW of rooftop projects in China, 24.1 MW in the U.S., 15.4 MW in Romania, and 4.3 MW in the United Kingdom. The China rooftop solar projects are concentrated in a few eastern provinces with credit-worthy Commercial and Industrial (C&I) off-takers.

 

Operating Assets  Capacity (MW) 
China DG   160.0 
- Zhejiang   47.0 
- Henan   46.0 
- Anhui   30.9 
- Hebei   16.9 
- Jiangsu   12.8 
- Shandong   2.0 
- Fujian   4.4 
Romania   15.4 
United States   24.1 
United Kingdom   4.3 
Total   203.8 

 

As of June 30, 2020, we had 15.0 MW of completed projects currently for sale.

 

Completed
Projects for
Sale
  Capacity (MW) 
Hungary   15.0 
Total   15.0 

  

Second Quarter 2020 Financial Details

 

Revenue

 

Second quarter of 2020 revenue was $26.2 million, up sequentially and up year-over-year. Revenue from Project Development was largely driven by the sale of the 14 MW projects in Hungary. Energy sales were mostly from the 36.4 million KWh generated by our rooftop DG projects in China.

 

Gross Profits and Gross Margin

 

Gross profit was $7.4 million in second quarter of 2020, yielding a gross margin of 28.4%. This compares to a gross profit of $1.4 million and gross margin of 6.4% in first quarter of 2020, and a gross profit of $10.5 million and gross margin of 77.3% in second quarter of 2019. The sequential increase in gross margin mainly reflects higher revenue contribution from energy sales and the project sales in the second quarter relative to last quarter.

 

Operating Expense and Operating Income

 

Second quarter of 2020 operating expenses were $2.9 million, up sequentially and down year-over-year. Marketing expenses of $135,000 were up sequentially and up year-over-year. General and administrative expenses of $1.8 million were down both sequentially and year-over-year. The decrease in general and administrative expenses reflected the Company’s commitment to exercise disciplined expense control.

 

 

2 Reconciliations to U.S. generally accepted accounting principles (“GAAP”) financial measures from non-GAAP financial measures are presented below under “Use of Non-GAAP Financial Measures” in Appendix 4.

 

 

 

 

 

 

Second quarter operating income was $4.6 million, compared to a loss of $1.1 million in first quarter of 2020 and an income of $7.1 million in second quarter of 2019. Non-GAAP2 operating income in second quarter of 2020 was $6.0 million, compared to non-GAAP operating loss of $0.7 million in first quarter of 2020 and non-GAAP operating income of $9.0 million in second quarter of 2019.

 

Net Income/loss

 

Second quarter of 2020 net income attributed to ReneSola Ltd was $3.1 million, compared to a loss of $4.4 million in first quarter of 2020 and an income of $5.1 million in second quarter of 2019. Net income per share was $0.06 in second quarter of 2020, compared to net loss per share of $0.09 in first quarter of 2020 and net income per share of $0.13 in second quarter of 2019.

 

Second quarter of 2020 non-GAAP net income attributed to ReneSola Ltd was $3.6 million, compared to non-GAAP net loss of $2.0 million in first quarter of 2020 and non-GAAP net income of $5.0 million in second quarter of 2019. Non-GAAP net income per share was $0.08, compared to non-GAAP net loss per share of $0.04 in first quarter of 2020 and non-GAAP net income per share of $0.13 in second quarter of 2019.

 

Financial Position

 

We had cash and cash equivalents of $11.3 million as of June 30, 2020, compared to $15.5 million as of March 31, 2020 and $8.7 million as of June 30, 2019. Long-term borrowings were $3.0 million as of June 30, 2020, compared to $8.5 million as of March 31, 2020 and $10.5 million as of June 30, 2019. Long-term failed sale-lease back and finance lease liabilities, associated with the financial leasing payables for rooftop projects in China, were $41.8 million as of June 30, 2020, compared to $44.0 million as of March 31, 2020 and $70.7 million as of June 30, 2019. Short-term borrowings were $31.5 million as of June 30, 2020, down from $33.5 million as of March 31, 2020 and $82.8 million as of June 30, 2019.

  

Outlook

 

For 2020, we continue to expect revenue in the range of $80 to $100 million and overall gross margin in the range of 18 % to 20%. For the third quarter of 2020, we expect revenue to be in the range of $8 to $10 million and overall gross margin in the range of 38% to 42%.

  

Conclusion

 

We remain confident that we have the right strategy, as our strategic focus on the U.S. and Europe positions us as a global leader in project development. We intend to drive down our cost of capital by continuing to strengthen our balance sheet, and through greater visibility and accessibility in the U.S. capital markets. We are focused on operating efficiently and profitably, delivering high returns and generating strong cash flow, which we believe can drive a higher valuation over time. In 2020, we will continue to grow our business globally. With our talented team, diversified geographic coverage and track record of success at every stage of project development, we believe we are well-positioned to deliver profitable growth in the years ahead.

 

I want to thank the ReneSola Power team for their great efforts and work to address the challenges we face in the current environment. And, I would like to thank our investors and stakeholders for your continued support of ReneSola Power.

 

 

 

  

 

 

Second Quarter 2020 Earnings Results Conference Call

 

As announced on August 6, 2020, we will host a conference call today to discuss our Q2 2020 business and financial results. The call is scheduled to begin at 8:30 a.m. U.S. Eastern Time (8:30 p.m. China Standard Time).

 

Please register in advance to join the conference call using the link provided below and dial in 10 minutes before the call is scheduled to begin. Conference call access information will be provided upon registration.

 

Participant Online Registration: http://apac.directeventreg.com/registration/event/7846999

 

A replay of the conference call may be accessed by phone at the following numbers until September 4, 2020. To access the replay, please reference the conference passcode 7846999.

 

  Phone Number Toll-Free Number
United States +1 (646) 254-3697 +1 (855) 452-5696
Hong Kong +852 3051-2780 +852 (800) 963117
Mainland China

+86 (800) 870-0206

+86 (400) 602-2065

 
Other International +61 (2) 8199-0299  

 

Additionally, a live and archived webcast of the conference call will be available on the Investor Relations section of ReneSola Power's website at http://www.renesolapower.com.

 

Sincerely,

  

Yumin Liu

Chief Executive Officer

 

 

 

 

 

 

Safe Harbor Statement

 

This shareholder letter contains statements that constitute ''forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Whenever you read a statement that is not simply a statement of historical fact (such as when the Company describes what it "believes," "plans," "expects" or "anticipates" will occur, what "will" or "could" happen, and other similar statements), you must remember that the Company's expectations may not be correct, even though it believes that they are reasonable. Furthermore, the forward-looking statements are mainly related to the Company’s continuing operations and you may not be able to compare such information with the Company’s past performance or results. The Company does not guarantee that the forward-looking statements will happen as described or that they will happen at all. Further information regarding risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements is included in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's annual report on Form 20-F. The Company undertakes no obligation, beyond that required by law, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made, even though the Company's situation may change in the future.

 

For investor and media inquiries, please contact:

 

In the United States:

 

ReneSola Ltd

Mr. Adam Krop

 +1 (347) 577-9055 x115

IR.USA@renesolapower.com

 

The Blueshirt Group

Mr. Ralph Fong

+1 (415) 489-2195

ralph@blueshirtgroup.com

 

In China:

 

ReneSola Ltd

Ms. Ella Li

+86 (21) 6280-8070 x102

ir@renesolapower.com

 

The Blueshirt Group Asia

Mr. Gary Dvorchak, CFA

+86 (138) 1079-1480

gary@blueshirtgroup.com

 

 

 

 

 

 

 

Appendix 1: 

 

RENESOLA LTD

Unaudited Consolidated Statements of Income

(US dollars in thousands, except ADS and share data)

 

   Three Months Ended   Six Months Ended 
   Jun 30, 2020   Mar 31, 2020   Jun 30, 2019   Jun 30, 2020   Jun 30, 2019 
Net revenues   26,190    21,162    13,567    47,352    26,625 
Cost of revenues   (18,756)   (19,801)   (3,077)   (38,557)   (15,770)
Gross profit   7,434    1,361    10,490    8,795    10,855 
                          
Operating (expenses) income:                         
Sales and marketing   (135)   (68)   (77)   (203)   (100)
General and administrative   (1,784)   (2,049)   (2,747)   (3,833)   (5,070)
Impairment of long-lived assets   (1,013)   (80)   -    (1,093)   - 
Other operating income (loss)   64    (303)   (583)   (239)   (705)
Total operating expenses   (2,868)   (2,500)   (3,407)   (5,368)   (5,875)
                          
Income (loss) from operations   4,566    (1,139)   7,083    3,427    4,980 
                          
Non-operating (expenses) income:                         
Interest income   185    207    121    392    234 
Interest expense   (1,657)   (1,606)   (2,370)   (3,263)   (4,690)
Foreign exchange gains (loss)   564    (2,129)   1,739    (1,565)   512 
Income (loss) before income tax, noncontrolling interests   3,658    (4,667)   6,573    (1,009)   1,036 
                          
Income taxexpense   (130)   (10)   (64)   (140)   (79)
Net income (loss)   3,528    (4,677)   6,509    (1,149)   957 
                          
Less: Net income (loss) attributed to noncontrolling interests   441    (283)   1,385    158    1,208 
Net income (loss) attributed to ReneSola Ltd   3,087    (4,394)   5,124    (1,307)   (251)
                          
                          
Income (loss) attributed to ReneSola Ltd per share                         
Basic   0.06    (0.09)   0.13    (0.03)   (0.01)
Diluted   0.06    (0.09)   0.13    (0.03)   (0.01)
                          
Weighted average number of shares used in computing income (loss) per share*                         
Basic   48,081,890    48,081,890    38,081,890    48,081,890    38,081,890 
Diluted   48,081,890    48,081,890    38,081,890    48,081,890    38,081,890 

 

*Share refers to our American depositary shares (ADSs), each of which represents 10 ordinary shares

 

 

 

 

  

Appendix 2 

 

RENESOLA LTD

Unaudited Consolidated Balance Sheets

(US dollars in thousands)

 

   Jun 30,   Mar 31,   Jun 30, 
   2020   2020   2019 
ASSETS            
Current assets:               
Cash and cash equivalents   11,284    15,458    8,729 
Restricted cash   782    1,118    3,261 
Accounts receivable, net of allowances for doubtful accounts   24,271    15,208    39,467 
Advances to suppliers, net   2,725    190    180 
Value added tax recoverable   5,252    5,794    9,816 
Prepaid expenses and other current assets   7,414    6,397    7,509 
Project assets current   8,009    22,027    69,948 
Assets held for sale   8,630    17,972    - 
Total current assets   68,367    84,164    138,910 
                
Property, plant and equipment, net   136,959    139,424    179,832 
Deferred tax assets, net   759    901    1,664 
Project assets non-current   5,827    6,324    12,318 
Operating lease right-of-use assets   22,118    23,564    35,019 
Finance lease right-of-use assets   24,114    24,501    34,123 
Other non-current assets   19,884    18,026    4,426 
Total assets   278,028    296,904    406,292 
                
LIABILITIES AND SHAREHOLDERS' EQUITY               
                
Current liabilities:               
Short-term borrowings   31,459    33,548    82,807 
Bond payable current   -    -    13,121 
Accounts payable   6,732    6,949    10,773 
Advances from customers   81    1,234    23 
Amounts due to related parties   2,794    2,640    10,126 
Other current liabilities   17,810    24,493    30,485 
Income tax payable   800    851    1,042 
Salary payable   355    401    833 
Operating lease liabilities current   482    485    622 
Failed sale-lease back and finance lease liabilities current   10,670    10,331    12,925 
Liabilities held for sale   4,721    8,476    - 
Total current liabilities   75,904    89,408    162,757 
                
Long-term borrowings   2,995    8,475    10,514 
Operating lease liabilities non-current   21,202    22,648    33,567 
Failed sale-lease back and finance lease liabilities non-current   41,828    44,008    70,712 
Total liabilities   141,929    164,539    277,550 
                
Shareholders' equity               
Common shares   530,208    530,208    519,313 
Additional paid-in capital   9,891    9,807    9,596 
Accumulated deficit   (443,654)   (446,740)   (433,766)
Accumulated other comprehensive loss   (2,799)   (2,933)   (2,746)
Total equity attributed to ReneSola Ltd   93,646    90,342    92,397 
Noncontrolling interest   42,453    42,023    36,345 
Totalshareholders' equity   136,099    132,365    128,742 
                
Total liabilities and shareholders' equity   278,028    296,904    406,292 

 

 

 

 

 

  

Appendix 3 

 

RENESOLA LTD

Unaudited Consolidated Statements of Cash Flow

(US dollar in thousands)

 

   Three Months Ended 
   Jun 30, 2020   Mar 31, 2020   Jun 30, 2019 
Net cash provided by (used in) operating activities   5,359    (9,865)   5,741 
                
Net cash provided by (used in) investing activities   148    1,181    (2,180)
                
Net cash used in financing activities   (9,398)   (1,379)   (367)
                
Effect of exchange rate changes   (583)   1,942    (1,171)
Net increase (decrease) in cash and cash equivalents and restricted cash   (4,474)   (8,121)   2,023 
Cash and cash equivalents and restricted cash, beginning of year   16,576    24,697    9,967 
Cash and cash equivalents and restricted cash held for sale   (36)   -    - 
Cash and cash equivalents and restricted cash, end of year   12,066    16,576    11,990 
                

  

 

 

 

 

  

Appendix 4:

 

Use of Non-GAAP Financial Measures

 

To supplement ReneSola Ltd’s financial statements presented on a GAAP basis, ReneSola Ltd provides Adjusted EBITDA as supplemental measures of its performance.

 

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding pro-forma operations, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with EBITDA, Adjusted EBITDA, non-GAAP net income/ (loss) attributed to ReneSola Ltd and non-GAAP EPS as non-GAAP financial measures of earnings.

 

• EBITDA represents net income before income tax expense (benefit), interest expense, depreciation and amortization.

 

• Adjusted EBITDA represents EBITDA plus discount of electricity subsidy in China, plus share-based compensation, plus bad debt provision, plus impairment of long-lived assets, plus one-time penalty of postponed payables, plus loss on one-time settlement of disputed Turkish receivables, plus loss/(gain) on disposal of assets, plus foreign exchange loss/(gain).

 

•Non-GAAP net income/ (loss) attributed to ReneSola Ltd represents GAAP net income/(loss) attributed to ReneSola Ltd plus discount of electricity subsidy in China, plus share-based compensation, plus bad debt provision, plus impairment of long-lived assets, plus one-time penalty of postponed payables, plus loss on one-time settlement of disputed Turkish receivables, plus loss/(gain) on disposal of assets, plus foreign exchange loss/(gain).

 

• Non-GAAP EPS represents Non-GAAP net income/ (loss) attributed to ReneSola Ltd divided by the number of fully diluted shares outstanding.

 

Our management uses EBITDA, Adjusted EBITDA, non-GAAP net income/ (loss) attributed to ReneSola Ltd and non-GAAP EPS as financial measures to evaluate the profitability and efficiency of our business model. We use these non-GAAP financial measures to access the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measures that are derived from them, provide supplemental information to analyze our operations between periods and over time.

 

We find these measures especially useful when reviewing pro-forma results of operations, which include large non-cash impairment of long-lived assets and loss on disposal of assets. Investors should consider our non-GAAP financial measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

 

 

 

 

 

 

GAAP to Non-GAAP Unaudited Reconciliation 

 

   Three months ended   Six Months Ended
   Jun 30, 2020   March 31, 2020   Jun 30, 2019   Jun 30, 2020   Jun 30, 2019 
              (in thousands)           
Reconciliation of Revenue                         
GAAP Net revenue  $26,190   $21,162   $13,567   $47,352   $26,625 
Add: Discount of electricity subsidy in China   267    128    -    395    - 
Non-GAAP Net revenue  $26,457   $21,290   $13,567   $47,747   $26,625 
GAAP Gross Margin                         
US. GAAP as reported  $7,434   $1,361   $10,490   $8,795   $10,855 
Add: Discount of electricity subsidy in China   267    128    -    395    - 
Non-GAAP Gross Margin  $7,701   $1,489   $10,490   $9,190   $10,855 
Reconciliation of operating expenses                         
GAAP operating expenses  $(2,868)  $(2,500)  $(3,407)  $(5,368)  $(5,875)
Add: Discount of electricity subsidy in China   -    -    -    -    - 
Add: Share based compensation   85    94    67    178    232 
Add: Bad debt provision of receivables   -    (15)   944    (15)   911 
Add: Impairment of long-lived assets   1,013    80    -    1,093    22 
Add: Penalty of postponed property, plant and equipment payable   -    -    -    -    33 
Add: Loss on disposal of property, plant and equipment   22    199    1,080    220    1,261 
Less: Gains on disposal of property, plant and equipment   -    -    (128)   -    (270)
Non-GAAP operating expenses  $(1,749)  $(2,143)  $(1,444)  $(3,892)  $(3,686)
Reconciliation of Operation Income(loss)                         
GAAP Operation Income(loss)  $4,566   $(1,139)  $7,083   $3,427   $4,980 
Add: Discount of electricity subsidy in China   267    128    -    395    - 
Add: Share based compensation   85    94    67    178    232 
Add: Bad debt provision of receivables   -    (15)   944    (15)   911 
Add: Impairment of long-lived assets   1,013    80    -    1,093    22 
Add: Penalty of postponed property, plant and equipment payable   -    -    -    -    33 
Add: Loss on disposal of property, plant and equipment   22    199    1,080    220    1,261 
Less: Gains on disposal of property, plant and equipment   -    -    (128)   -    (270)
Non-GAAP Operation Income(loss)  $5,952   $(654)  $9,046   $5,298   $7,169 
Reconciliation of Net income (loss) attributed to ReneSola Ltd                         
GAAP Net income (loss) attributed to ReneSola Ltd  $3,087   $(4,394)  $5,124   $(1,307)  $(251)
Add: Discount of electricity subsidy in China   160    77    -    236    - 
Add: Share based compensation   85    94    67    178    232 
Add: Bad debt provision of receivables   -    (15)   944    (15)   911 
Add: Impairment of long-lived assets   972    48    -    1,020    13 
Add: Penalty of postponed property, plant and equipment payable   -    -    -    -    33 
Add: Loss on disposal of property, plant and equipment   13    119    647    132    755 
Less: Gains on disposal of property, plant and equipment   -    -    (76)   -    (161)
Less: Interest income of discounted electricity subsidy in China   (114)   (106)   -    (220)   - 
Add: Foreign exchange loss/(gain)   (564)   2,129    (1,739)   1,565    (512)
Non-GAAP Net income (loss) attributed to ReneSola Ltd  $3,639   $(2,049)  $4,966   $1,590   $1,020