Suntech Power Reports Fourth Quarter and Fiscal Year 2005 Unaudited Financial Results
Posted on 2006-02-13
Highlights: - Fourth quarter 2005 net revenues up 136.3% to $89.0 million over fourth quarter 2004 - Fiscal year 2005 net revenues up 165.0% to $226.0 million over fiscal year 2004 - Fourth quarter 2005 net income was $10.6 million, or $0.10 per basic share - Fiscal year 2005 net income was $30.6 million, or $0.31 per basic share - Production capacity reached 150MW at the end of 2005WUXI, China, Feb. 13 /PRNewswire-FirstCall/ -- Suntech Power Holdings Co., Ltd. (NYSE: STP), a leading global solar energy company, today announced fourth quarter 2005 total net revenues of $89.0 million and net income of $10.6 million, or $0.10 per basic share. Total net revenues for fiscal year 2005 were $226.0 million and net income was $30.6 million, or $0.31 per basic share."Increasing adoption of solar energy initiatives worldwide, particularly in China and Spain, drove strong demand for our solar cell and module products in the fourth quarter," said Dr. Zhengrong Shi, Suntech's chairman and CEO. "This led to our solid financial performance for the fourth quarter and the year as we continue to be one of the fastest growing pure play PV manufacturers in the world."We significantly grew our production capacity in 2005 to 150MW. The demand for solar energy worldwide continues to exceed supply, and the market is rapidly absorbing any increases in capacity. By the end of 2006, we expect our capacity to reach 240MW," added Dr. Shi.Fourth Quarter 2005 ResultsSuntech's total net revenues for the fourth quarter increased 136.3 percent to $89.0 million over fourth quarter 2004 total net revenues of $37.7 million, and 57.2 percent over third quarter 2005 total net revenues of $56.6 million. Growth in net revenues in the fourth quarter was due to increases in production volumes and demand, and improvements in the average sales prices of Suntech's photovoltaic ("PV" or "solar") cell and module products.Suntech successfully executed its 2005 expansion plans adding a 30MW solar cell production line that became operational at the end of the fourth quarter of 2005. This increases Suntech's annual capacity to 150MW from 120MW as of September 30, 2005. During the fourth quarter, Suntech derived approximately 63.7 percent of total net revenues from PV modules. Fourth Quarter 2005 PV Net Revenues by Products Q4 2005 % of Q4 Growth Growth 2005 Net vs. Q4 vs. Q3 Revenues 2004 2005 PV Cells $31.7 million 35.7 % +1,729.6% +126.6% PV Modules $56.7 million 63.7 % +57.8% +34.8% PV System Integration $ 0.6 million 0.6 % +6,301.8% +2.6% Total $89.0 million 100.0 %Gross profit for the fourth quarter was $23.6 million, representing an increase of 83.7 percent over fourth quarter 2004 gross profit of $12.8 million, and an increase of 39.6 percent over third quarter 2005. Gross margin decreased to 26.5 percent, compared with 34.1 percent in the fourth quarter 2004 and 29.8 percent in the third quarter 2005. The decrease in gross margin in the fourth quarter 2005 as compared with the fourth quarter 2004 and the third quarter 2005 was largely attributable to an increase in the cost of raw materials, which constituted the largest portion of cost of revenues. The sequential decrease in gross margin was also partly due to a $1.6 million inventory write-off for substandard wafers as well as an increase in share-based compensation to $1.2 million.The Company has continued to focus on technology research and development to achieve high performance solar cells at low cost per watt. As of December 31, 2005, the conversion efficiency rates of the Company's monocrystalline and multicrystalline silicon PV cells reached 17.0 percent and 15.3 percent, respectively, up from 16.5 percent and 15.0 percent, respectively, at the end of the third quarter 2005.Income from operations for the fourth quarter was $12.5 million, or 14.1 percent of total net revenues, compared with $11.0 million, or 29.3 percent of total net revenues in the fourth quarter of 2004, and $10.3 million, or 18.2 percent of total net revenues in the third quarter 2005. The decrease in operating margin compared with both prior periods was primarily due to decrease in gross profit margins as well as increases in share based compensation and research and development expenses.Net income for the fourth quarter was $10.6 million, representing a 4.0 percent decrease from the same quarter in the prior year and a 21.9 percent increase from the third quarter 2005. Basic net income per share for the fourth quarter 2005 was $0.10.Full Year 2005 Financial ResultsFor the full year 2005, Suntech's total net revenues increased 165.0 percent to $226.0 million over total net revenues in 2004 of $85.3 million. For the full year 2005, Suntech derived approximately 24.2 percent of total net revenues from PV cells driven mainly by the strong demand from China's domestic market. Fiscal Year 2005 PV Net Revenues by Products 2005 % of Growth 2004 % of 2005 vs. 2004 Net 2004 Net Revenues Revenues PV Cells $54.7 million 24.2% 645.5% $7.3 million 8.6% PV Modules $170.1 million 75.3% 118.4% $77.9 million 91.4% PV System Integration $1.2 million 0.5% 2,012.6% $0.1 million 0.0% Total $226.0 million 100.0% $85.3 million 100.0%Gross profit for the full year 2005 was $68.6 million, representing an increase of 173.0 percent from the prior year's gross profit of $25.1 million. Gross margin increased slightly to 30.3 percent, compared with 29.4 percent in the previous year. Income from operations for the full year 2005 was $42.7 million, or 18.9 percent of total net revenues, and a 113.2 percent increase over 2004 income from operations of $20.0 million, or 23.5 percent of total net revenues. The decline in operating margin in 2005 is primarily due to the increase in general and administrative expenses related to Suntech's business expansion, restructuring and share based compensation charges.Net income for the full year 2005 was $30.6 million, representing a 55.0 percent increase from the previous year. Basic net income per share was $0.31 in 2005 compared to $0.22 in 2004.Balance Sheet and Cash FlowAs of December 31, 2005, Suntech had cash and cash equivalents of $359.3 million. Net operating cash flow for the full year 2005 was $22.6 million, compared with $2.6 million for 2004. Suntech had capital expenditures of $29.7 million in 2005, compared with $9.4 million for 2004.Business OutlookSuntech expects its total net revenues in the first quarter 2006 to be in the range of $75 million to $80 million, representing year-over-year growth in the range of 95 percent and 108 percent.Fourth Quarter and Year End 2005 Conference CallSuntech's earnings announcement conference call will take place on February 13, 2006 at 7:00 p.m., Eastern Time, which corresponds to February 14, 2006 at 8:00 a.m., Beijing/Hong Kong time. To access the conference call, please dial +1 617 213 8858 (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: 12676998).