EMEREN GROUP LTD March 23, 2022
Fellow Shareholders,
2021 was another extraordinary year for ReneSola Power. Amid the global pandemic, we kept executing and progressing our mission to become a leading global solar project developer by concentrating on high-quality and high-return projects in our core markets. I am extremely proud of what we have accomplished over the past several years since transitioning the company to focus solely on the project development business in late 2017. In 2021, we grew our project pipeline to a record 2.2 GWs and achieved record profitability of $6.9 million GAAP net income and $14.7 million non-GAAP income, respectively. Moreover, we significantly strengthened our balance sheet, which should position us well to take advantage of accelerating industry tailwinds over the coming years.
Now let me summarize our key accomplishments in 2021, which was another extraordinary year for us in terms of our financial performance as well as operational execution:
- We returned our business to growth with full-year revenue up 8% year-over-year to $79.7 million and GAAP net income per ADS up 77% to $0.10 per ADS from $0.06 per ADS in 2020. Non-GAAP net income per ADS was up 180% to $0.21 per ADS from $0.08 per ADS. In addition, we significantly improved gross margins to 39.4% in 2021 vs. 22.7% in 2020.
- We more than doubled our project development business' mid-to-late stage project pipeline from 1 GW to 2.2 GW, above our original growth target for 2.0 GW. This growth came from all the main regions that we focus on, particularly the U.S. and Europe.
- We sold a total of 128 MW of solar projects in 2021. We sold multiple projects in the U.S., Poland, Spain, and Hungary. These transactions demonstrate our ability to optimize our solar assets through strategic sales, which enables us to generate cash flow, realize profits and further strengthen our balance sheet. Sales included 12.3 MW of DG projects in Hungary, 75 MW of DG projects in Poland, 28.8 MW of community solar projects in the U.S., and 12 MW of DG projects in Spain.
- In Q4 2021, we repurchased approximately $18 million or approximately 3 million ADS shares or 4% of our total American Depository Shares ("ADS") outstanding. We believe this share repurchase demonstrates the confidence of our board and management team in the strength of our business and the compelling growth opportunities in front of us.
- We significantly strengthened our financial position and balance sheet, as we raised $290 million in a follow-onequity offering in January 2021 and reduced debt throughout the year. The strengthened capital position will be a critical strategic advantage as we accelerate our growth plans to be ready to seize the significant opportunity before us as countries accelerate their renewable energy infrastructure plans.
As we look forward, the solar industry is experiencing unprecedented growth and opportunities as the crisis in Ukraine has awakened a worldwide desire and sense of urgency to achieve energy independence, particularly through renewable energy. We are already seeing signs of this acceleration in Europe, our largest market. As an example, on Feb 28th, Germany announced its decision to rapidly accelerate the expansion of wind and solar power with the goal to generate almost all of the country's electricity from renewable sources by 2035. Across Europe, many countries are announcing plans similar to Germany's. Further, on March 9, the European Commission announced that it will simplify renewable permitting as part of a new strategy aimed at increasing the European Union's energy independence while ending its reliance on Russian gas before 2030.
The U.S., our second largest market is also expected to grow rapidly in the coming years both in utility scale projects and community solar programs. As an example, recently the U.S. Department of Energy announced plans to enable enough community solar projects to power 5 million homes by 2025. This initiative would increase current capacity by an additional 700%.
With the significant strong demand for solar energy, we believe we are well positioned to capitalize on this opportunity given our deep expertise in developing and operating solar projects, extensive network of industry partnerships throughout Europe, well capitalized balance sheet, and unmatched track record in closing financing transactions, and profitably monetizing projects.
With that overview, we will now review the details of our full-year and fourth quarter operating and financial performance.
2021 Financial Highlights: Significant improvement in margins and profitability driven by growth in higher margin project development business
Full Year 2021
- Revenue increased 8% y/y to $79.7 million from $73.5 million
- High margin Project Development segment revenue increased 23% y/y to $61.1 million and now represented 76.7% of revenue, up from 67.1% in 2020
- GAAP gross margin improved to 39.4% from 22.7%
- GAAP net income increased to $6.9 million in 2021 from $2.8 million in 2020
- Non-GAAPnet income nearly quadrupled to $14.7 million from $3.7 million
(in $ millions) | 2021 | 2020 | Y/Y |
Change | |||
Revenue | $79.7 | $73.5 | +8% |
GAAP gross profit | $31.4 | $16.7 | +88% |
GAAP operating income | $12.7 | $6.8 | +87% |
Non-GAAP operating income | $20.0 | $10.0 | +99% |
EBITDA | $17.7 | $14.9 | +19% |
Adjusted EBITDA | $25.9 | $16.4 | +58% |
GAAP net income attributed to ReneSola Power | $6.9 | $2.8 | +147% |
Non-GAAP net income attributed to ReneSola Power | $14.7 | $3.7 | +292% |
Revenue was composed as follows:
Segment | 2021 Revenue | % of Total |
(US$'000) | Revenue | |
Project Development | $61,126 | 77% |
IPP | $17,965 | 22% |
Others | $571 | 1% |
Total | $79,662 | 100% |
"IPP" consists of sale of electricity in China and U.S.
"Other" refers to operations and maintenance.
Revenue breakdown by regions:
Region | 2021 Revenue | % of total |
(US $'000) | Revenue | |
Europe | 48,865 | 62% |
North America | 13,895 | 17% |
China | 16,902 | 21% |
Total | 79,662 | 100% |
Q4'21 Financial Highlights: Robust year-over-year growth and cash flow
Q4 2021
- Revenue grew 47% sequentially to $22.8 million, slightly below the midpoint of our guidance
- GAAP gross margin was 31.7% below our guidance range of 36% to 40% due to a delayed project sale, which is now scheduled to close in first half of 2022
- GAAP net loss for Q4'21 was $1.6 million loss as a result of several non-cash items
- Non-GAAPnet income grew 47% sequentially to $2.5 million from $1.7 million
- $5.5 million in free cash flow versus negative $9.5 million in Q4'20
(in $ millions) | Q4'21 | Q3'21 | Q/Q |
Change | |||
GAAP Revenue | $22.8 | $15.5 | +47% |
GAAP gross profit | $7.2 | $6.1 | +19% |
GAAP operating income (loss) | ($1.4) | $2.7 | -153% |
Non-GAAP operating income | $3.5 | $3.2 | +10% |
EBITDA | $0.7 | $3.6 | -81% |
Adjusted EBITDA | $5.3 | $4.5 | +17% |
GAAP net income (loss) attributed to ReneSola Power | ($1.6) | $0.7 | -322% |
Non-GAAP net income attributed to ReneSola Power | $2.5 | $1.7 | +47% |
Revenue was composed as follows:
Segment | Q4'21 Revenue | % of Total |
(US$'000) | Revenue | |
Project Development | $19,160 | 84% |
IPP | $3,554 | 15% |
Others | $102 | 1% |
Total | $22,816 | 100% |
"IPP" consists of sale of electricity in China and the U.S.
"Other" refers to operations and maintenance.
Revenue breakdown by regions:
Region | Q4'21 Revenue | % of Total |
(US $'000) | Revenue | |
Europe | 16,496 | 72% |
North America | 2,909 | 13% |
China | 3,411 | 15% |
Total | 22,816 | 100% |
Outperformed Original Pipeline Growth Goal
In the beginning of 2021, we set a goal to grow our mid-to-late-stage pipeline to over 2 GW before the end of the year. Due to superb execution in the face of many challenges resulting from the global pandemic, we exceeded our original target and ended the quarter with a high-quality project pipeline1 of approximately 2.2 GW, with about 15 MW under construction. In Q4 we sold 37 MW of solar projects in Poland, 12 MW in Spain, 4 MW in Hungary, and 4 MW in the U.S.
The following table details our mid-to-late stage project pipeline by location:
Project Location | Mid-to-late stage (MW) |
U.S. | 728 |
Poland | 594 |
Spain | 286 |
U.K. | 214 |
Germany | 37 |
France | 100 |
Hungary | 52 |
Italy | 57 |
China (IPP) | 114 |
Total | 2,182 |
In 2022, we expect to build on our strong pipeline growth momentum and close the year at 3 GWs with a significant portion of the growth coming from Europe as a result of the favorable policy support. We target to grow the Company's mid-to-late stage pipeline to 5 GWs by the end of 2024 with a significant portion of the growth coming from Europe.
1 Mid-to-late stage project pipeline includes 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 ReneSola Power.
Detailed Review of Pipeline by Region
Our performance is strong across most regions of the world, as reflected in our pipeline.
United States
Our mid-to-late-stage projects total 728 MW, of which 76 MW are community solar projects in Minnesota, Maine, and New York. Additionally, we have projects under development in Florida, Pennsylvania, Illinois, and California. Meanwhile, we operate 24 MW of utility projects in North Carolina.
U.S.A. | Location | Capacity | Project Type | Status | Expected | Business |
(MW) | NTP/Sale | Model | ||||
Minnesota | MN | 6 | Community Solar | Under Development | 2022 | NTP Sale |
New York | NY | 170 | Community+Utility | Under Development | 2022 | NTP Sale |
Florida | FL | 100 | Utility Scale | Under Development | 2022/2023 | NTP Sale |
Maine | ME | 10 | DG & Community Solar | Under Development | 2022 | NTP Sale |
Welcome Solar | PA | 70 | Utility Scale PV+Storage | Under Development | 2022 | NTP Sale |
Gibson Solar | CA | 35 | Utility PV+Storage | Under Development | 2022/2023 | NTP Sale |
Illinois | IL | 50 | Utility PV+Storage | Under Development | 2023/2024 | NTP Sale |
Virginia | VA | 7 | Community Solar | Under Development | 2023/2024 | NTP Sale |
California | CA | 280 | Utility PV+Storage | Under Development | 2024/2025 | NTP Sale |
Total | 728 |
Poland
In Q4 2021, we closed 37 MW of solar projects in Poland to Obton, a leading solar international investment company based in Denmark. The portfolio comprised 37 solar utility projects across Poland with capacity of 1 MW each for 33 MW and a 4 MW project and are expected to be grid- connected within the next year. The projects will be sold at the "Ready to Build" (RTB) stage. Upon closing of the sale, ReneSola Power will be responsible for EPC management, project financing, and final delivery of the projects to Obton at the COD stage. At quarter-end, in Poland, we had ~594 MW of projects in our mid-to-late stage pipeline.
Poland | Project | Capacity | Project Type | Status | Expected | Business Model |
(MW) | RTB/Sale | |||||
Auction 2020 | Solar farms | 75 | Ground-mounted | Under Construction | 2022 + 2023 | RTB Sale + EPC |
and 2021 | COD | |||||
Current | Including smaller | ~519 | Ground-mounted | Under Development | 2022/2024 | RTB Sale |
Pipeline | scale projects | RTB | ||||
Total | ~594 |
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ReneSola Ltd. published this content on 23 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 March 2022 20:30:09 UTC.
