SEOUL, South Korea,
Nov. 30, 2018 /PRNewswire/ -- Hanwha
Q CELLS Co., Ltd. ("Hanwha Q CELLS" or the "Company") (NASDAQ:
HQCL), a global leading photovoltaic manufacturer of
high-performance, high-quality solar modules, today reported its
unaudited financial results for the third quarter ended
September 30, 2018. The Company will
not be hosting a conference call to discuss these results.
Third Quarter 2018 Highlights
- Net revenues were $559.3 million,
compared with $518.4 million in the
second quarter of 2018 and $543.0
million in the third quarter of 2017.
- Gross margin was -6.3%, compared with 14.0% in the second
quarter of 2018 and 11.6% in the third quarter of 2017. Excluding
certain one-time effects, gross margin for the third quarter of
2018 was 13.0%.
- Operating loss was $107.0
million, compared with an operating income of $4.8 million in the second quarter of 2018 and
operating income of $10.6 million in
the third quarter of 2017. Excluding certain one-time effects,
operating income for the third quarter of 2018 was $17.9 million.
- Net loss attributable to the Company's ordinary shareholders
was $164.6 million, compared with net
loss of $41.3 million in the second
quarter of 2018 and net income of $5.0
million in the third quarter of 2017. Excluding certain
one-time effects, net loss attributable to the Company's ordinary
shareholders for the third quarter of 2018 was $39.7 million. Excluding these one-time effects
as well as foreign exchange losses, net income attributable to
Company's ordinary shareholders for the third quarter of 2018 was
$2.7 million.
- Loss per fully diluted American Depositary Share ("ADS" and
each ADS represents 50 of the Company's ordinary shares) was
$1.98, compared with loss per fully
diluted ADS of $0.50 in the second
quarter of 2018 and income per fully diluted ADS of $0.06 in the third quarter of 2017. Excluding
certain one-time effects, loss per fully diluted American
Depositary Share for the third quarter of 2018 was $0.48. Excluding these one-time effects as well
as foreign exchange losses, earnings per fully diluted American
Depositary Share for the third quarter of 2018 was $0.03.
Third Quarter 2018 Results of Operations
Net Revenues
- Total net revenues were $559.3
million, up 7.9% from $518.4
million in the second quarter of 2018 and up 3.0% from
$543.0 million in the third quarter
of 2017. This was due to increased shipment volume, which mitigated
the effects of declining ASPs, and an increase in demand for the
Company's premium product, the Q.PEAK DUO, which was associated to
the Company increasing and expanding its sales network within key
regions.
Gross Profit and Margin
- Gross loss in the third quarter of 2018 was $35.3 million, compared to a gross profit of
$72.6 million in the second quarter
of 2018 and a gross profit of $63.2
million in the third quarter of 2017. Excluding a
$108.2 million one-time loss
associated with the discontinuation of the Company's China-based ingot manufacturing operations in
September, gross profit for the third quarter of 2018 was
$72.9 million. The Company concluded
that it would be in its best interest to discontinue unprofitable
operations and focus on its core business – the manufacturing of
cells and modules. This decision was based on the fact that the
current scale of ingot operations would preclude the Company from
being competitive on a global scale, and while the discontinuation
of ingot production resulted in a one-time loss, the Company
believes it will improve long-term profitability by allowing us to
focus its core competencies.
- Gross margin in the third quarter of 2018 was -6.3%, compared
with 14.0% in the second quarter of 2018 and 11.6% in the third
quarter of 2017. Excluding the one-time effects related to the
discontinuation of ingot manufacturing operations, gross margin for
the third quarter of 2018 was 13.0%.
Results of Operations and Operating Margin
- Loss from operations in the third quarter of 2018 was
$107.0 million, compared with income
from operations of $4.8 million in
the second quarter of 2018 and $10.6
million in the third quarter of 2017. Excluding the one-time
effects related to the discontinuation of ingot manufacturing
operations as well as a $16.7 million
allowance for bad debt on certain overdue receivables, operating
income for the third quarter of 2018 was $17.9 million.
- Operating margin in the third quarter of 2018 was -19.1%,
compared with 0.9% in the second quarter of 2018 and 2.0% in the
third quarter of 2017. Excluding the one-time effects related to
the discontinuation of ingot manufacturing operations and to
certain overdue receivables, operating margin for the third quarter
of 2018 was 3.2%.
- Total operating expenses were $71.7
million in the third quarter of 2018, up 5.8% from
$67.8 million in the second quarter
of 2018 and up 36.3% from $52.6
million in the third quarter of 2017. Excluding the one-time
effects related to certain overdue receivables, total operating
expenses for the third quarter of 2018 were $55.0 million.
- Selling and marketing expenses were $37.5 million in the third quarter of 2018, down
10.7% from $42.0 million in the
second quarter of 2018 and up 22.5% from $30.6 million in the third quarter of 2017.
- General and administrative expenses were $30.0 million in the third quarter of 2018, up
42.9% from $21.0 million in the
second quarter of 2018 and up 72.4% from $17.4 million in the third quarter of 2017.
Excluding the one-time effects related to certain overdue
receivables, general and administrative expenses for the third
quarter of 2018 were $13.3
million.
- Research and development expenses were $4.2 million in the third quarter of 2018, down
12.5% from $4.8 million in the second
quarter of 2018 and down 8.7% from $4.6
million in the third quarter of 2017.
Net Interest Expense
- Net interest expense was $14.1
million in the third quarter of 2018, compared with
$15.2 million in the second quarter
of 2018 and $10.0 million in the
third quarter of 2017.
Foreign Currency Exchange Gain (Loss)
- Foreign currency exchange loss was $42.4
million in the third quarter of 2018, compared with a loss
of $37.8 million in the second
quarter of 2018 and a gain of $7.3
million in the third quarter of 2017. This was mainly due to
a weak Turkish lira in relation to the U.S. dollar, causing a
foreign currency exchange loss both in the second and third
quarters.
Gain (loss) on Change in Fair Value of Derivative
Contracts
- Loss on change in fair value of derivative contracts was
$0.9 million in the third quarter of
2018, compared to a gain of $8.1
million in the second quarter of 2018 and a loss of
$0.6 million in the third quarter of
2017.
Income Tax Expense (Benefit)
- Income tax expense was $1.2
million in the third quarter of 2018, compared with an
income tax expense of $1.9 million in
the second quarter of 2018 and an income tax expense of
$2.5 million in the third quarter of
2017.
Net Income (Loss) and Earnings (Loss) per ADS
- Net loss attributable to Company's ordinary shareholders was
$164.6 million in the third quarter
of 2018, compared with net loss of $41.3
million in the second quarter of 2018 and net income of
$5.0 million in the third quarter of
2017. Excluding certain one-time effects, net loss attributable to
the Company's ordinary shareholders for the third quarter of 2018
was $39.7 million. Excluding these
one-time effects as well as foreign exchange losses, net income
attributable to Company's ordinary shareholders for the third
quarter of 2018 was $2.7
million.
- Loss per fully diluted ADS on a GAAP basis was $1.98 in the third quarter of 2018, compared with
a loss per fully diluted ADS of $0.50
in the second quarter of 2018 and income per fully diluted ADS of
$0.06 in the third quarter of 2017.
Excluding certain one-time effects, loss per fully diluted American
Depositary Share for the third quarter of 2018 was $0.48. Excluding these one-time effects as well
as foreign exchange losses, earnings per fully diluted American
Depositary Share for the third quarter of 2018 was $0.03.
2018 Third Quarter Financial Position
As of September 30, 2018, the
Company had cash and cash equivalents of $197.4 million, compared with $183.4 million as of December 31, 2017. The restricted cash as of
September 30, 2018 was $140.2 million, compared with $139.7 million as of December 31, 2017.
As of September 30, 2018, accounts
receivable was $554.8 million,
compared with $525.4 million, as of
December 31, 2017. Inventories were
$498.4 million as of September 30, 2018, compared with $293.6 million as of December 31, 2017.
As of September 30, 2018, accounts
payable was $665.9 million, compared
with $454.8 million, as of
December 31, 2017.
Total short-term borrowings (including the current portion of
long-term borrowings) as of September 30,
2018 was $729.5 million,
compared with $679.5 million as of
December 31, 2017.
As of September 30, 2018, the
Company had total long-term debt (net of current portion and
long-term notes) of $625.5 million
compared with $536.2 million as of
December 31, 2017. The Company's
long-term debt is comprised of bank and government borrowings, to
be repaid in installments until their maturities, ranging from one
to thirteen years.
Capital expenditures were $11.3
million in the third quarter of 2018.
Operations Updates
Production Capacity
As of September 30, 2018, the
Company's in-house, annualized production capacities were 4,500 MW
for cells and 4,500 MW for modules.
Furthermore, the Company has additional module availability of
up to 3,900 MW (annualized) as of September
30, 2018 from Hanwha Q CELLS Korea Corporation, an affiliate
of the Company. Hanwha Q CELLS Korea is expected to have a
nameplate capacity of 1,700 MW of module capacity in the United States in the first quarter of
2019.
Business Outlook
Fourth Quarter and Full Year 2018 Guidance
For the fourth quarter of 2018, the Company estimates net
revenues in the range of $590 to 610
million.
For the full year 2018, the Company provides the following
guidance:
- Total module shipments in the range of 5,500 to 5,700 MW
- Capital expenditures of approximately $146.0 million for manufacturing technology
upgrades and certain R&D related expenditures.
About Hanwha Q CELLS
Hanwha Q CELLS Co., Ltd. (NASDAQ: HQCL) is one of the world´s
largest and most recognized photovoltaic manufacturers for its
high-performance, high-quality solar cells and modules. It is
headquartered in Seoul, South
Korea (Global Executive HQ) and Thalheim, Germany (Technology & Innovation HQ) with
its diverse international manufacturing facilities in Malaysia and China. Hanwha Q CELLS offers the full spectrum
of photovoltaic products, applications and solutions, from modules
to kits to systems to large-scale solar power plants. Through its
growing global business network spanning Europe, North
America, Asia, South America, Africa and the Middle East, the company provides excellent
services and long-term partnerships to its customers in the
utility, commercial, governmental and residential markets. Hanwha Q
CELLS is a flagship company of Hanwha Group, a FORTUNE Global 500
firm and a Top 10 business enterprise in South Korea. For more information, visit:
http://www.hanwha-qcells.com.
Safe Harbor Statement
This report contains forward-looking statements that are not
statements of historical fact. These statements 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. These
forward-looking statements can be identified by terminology such as
"will," "expects," "anticipates," "future," "intends," "plans,"
"believes," "estimates" and similar statements. Such statements,
particularly statements about our guidance for performance in the
second quarter and the full year 2018, involve certain risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements. Such risks and
uncertainties include pending administrative and civil actions in
the United States under existing
or potential new statutes and regulations governing trade between
the United States and other
countries, and potential antidumping, countervailing or other
duties imposed on goods imported into the
United States, as well as the Company's access to new
capacity from an affiliate. Further information regarding these and
other risks is included in Hanwha Q CELLS' filings with the
Securities and Exchange Commission, including its annual report on
Form 20-F. Except as required by law, Hanwha Q CELLS does not
undertake any obligation to update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
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Hanwha Q CELLS
Co., Ltd.
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Unaudited Condensed
Consolidated Balance Sheets
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(in millions of US
dollars, except share data)
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September 30,
2018
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December 31,
2017
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ASSETS
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(unaudited)
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(audited)
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Current
assets
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Cash and cash
equivalents
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197.4
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183.4
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Restricted
cash
|
|
140.2
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139.7
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Accounts and notes
receivable - net
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455.5
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363.7
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Receivables from
related parties
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99.3
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161.7
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Inventories
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498.4
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293.6
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Derivative
contracts
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0.9
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0.5
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Other current
assets
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135.1
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109.5
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Total current assets
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1,526.8
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1,252.1
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Fixed assets -
net
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755.8
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837.6
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Intangible assets -
net
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30.0
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32.0
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Land use rights -
net
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31.3
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49.0
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Deferred tax assets -
net
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|
6.5
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9.1
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Loans to related
parties
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0.6
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5.6
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Other long-term
assets
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69.4
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77.2
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Total assets
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2,420.4
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2,262.6
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LIABILITIES AND
STOCKHOLDERS' EQUITY
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Current
liabilities
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Accounts
payable
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164.8
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180.3
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Notes
payable
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|
109.9
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|
76.3
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Payables to related
parties
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|
391.2
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198.2
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Deferred
revenue
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|
4.5
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2.0
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Accrued
expenses
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33.5
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31.5
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Other
payables
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24.1
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|
23.1
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Tax
payables
|
|
11.9
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|
9.2
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Short-term
debt
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|
514.3
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|
385.2
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Current portion of
long-term debt
|
|
115.3
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294.3
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Bonds payable -
current portion
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99.9
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-
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Customer
deposits
|
|
17.5
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10.4
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Derivative
contracts
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0.6
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|
0.4
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Litigation
accruals
|
|
0.1
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|
0.2
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Warranty
provision
|
|
32.4
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|
31.0
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|
|
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Other current
liabilities
|
|
5.9
|
|
2.1
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|
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Total current
liabilities
|
|
1,525.9
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|
1,244.2
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|
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Long-term
debt
|
|
625.5
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536.2
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Long-term warranty
provision
|
|
17.0
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|
17.5
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|
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Deferred tax
liabilities
|
|
5.3
|
|
8.7
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Total
liabilities
|
|
2,173.7
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|
1,806.6
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Stockholders'
equity
|
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Ordinary
shares
|
|
0.4
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|
0.4
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Additional paid-in
capital
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|
432.2
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432.2
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Accumulated
income
|
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(80.0)
|
|
94.9
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Accumulated other
comprehensive loss
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|
(105.9)
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|
(71.5)
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Total stockholders'
equity
|
|
246.7
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|
456.0
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Total liabilities, redeemable ordinary shares and
stockholders' equity
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2,420.4
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2,262.6
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Hanwha Q CELLS
Co., Ltd.
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Unaudited Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)
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(in millions of US
dollars, except share data and net income (loss) per
share)
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For the three months
ended
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For the nine months
ended
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September 30,
2018
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June 30,
2018
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March 31,
2018
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September 30,
2018
|
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September 30,
2017
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|
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
|
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Net sales
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559.3
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|
518.4
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|
443.0
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1,520.7
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1,552.7
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Cost of goods
sold
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594.6
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|
445.8
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364.1
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1,404.5
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1,362.5
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Gross profit
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(35.3)
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|
72.6
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|
78.9
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|
116.2
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190.2
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Selling and marketing
expenses
|
37.5
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|
42.0
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28.6
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|
108.1
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|
82.0
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General and
administrative expenses
|
30.0
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|
21.0
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|
12.7
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|
63.7
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49.1
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Research and
development expenses
|
4.2
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|
4.8
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4.5
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|
13.5
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|
17.5
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Other operating
expenses (income)
|
-
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-
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-
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-
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|
(17.4)
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Income (loss) from operations
|
(107.0)
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|
4.8
|
|
33.1
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|
(69.1)
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|
59.0
|
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Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
1.7
|
|
1.0
|
|
0.5
|
|
3.2
|
|
4.1
|
|
Interest expense
|
(15.8)
|
|
(16.2)
|
|
(12.7)
|
|
(44.7)
|
|
(32.8)
|
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Foreign exchange gain
(loss)
|
(42.4)
|
|
(37.8)
|
|
11.5
|
|
(68.7)
|
|
16.9
|
|
Gain (loss) on change in
fair value of derivative contracts
|
(0.9)
|
|
8.1
|
|
-
|
|
7.2
|
|
(4.0)
|
|
Investment income
(loss)
|
0.6
|
|
0.4
|
|
0.7
|
|
1.7
|
|
1.7
|
|
Miscellaneous income
(expense) - net
|
0.4
|
|
0.3
|
|
1.2
|
|
1.9
|
|
1.3
|
|
Other income (expenses),
net
|
(56.4)
|
|
(44.2)
|
|
1.2
|
|
(99.4)
|
|
(12.8)
|
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Income (loss) before income tax
|
(163.4)
|
|
(39.4)
|
|
34.3
|
|
(168.5)
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|
46.2
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
1.2
|
|
1.9
|
|
3.3
|
|
6.4
|
|
4.9
|
|
Net income (loss)
|
(164.6)
|
|
(41.3)
|
|
31.0
|
|
(174.9)
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|
41.3
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Net income (loss)
attributable to Hanwha Q CELLS Co., Ltd.'s stockholders per
share:
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|
Basic
|
|
|
(US$0.04)
|
|
(US$0.01)
|
|
US$0.01
|
|
(US$0.04)
|
|
US$0.01
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|
Diluted
|
|
(US$0.04)
|
|
(US$0.01)
|
|
US$0.01
|
|
(US$0.04)
|
|
US$0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Hanwha Q CELLS Co., Ltd.'s stockholders per
ADS:
|
|
|
|
|
|
|
|
Basic
|
|
|
(US$1.98)
|
|
(US$0.50)
|
|
US$0.37
|
|
(US$2.10)
|
|
US$0.50
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|
Diluted
|
|
(US$1.98)
|
|
(US$0.50)
|
|
US$0.37
|
|
(US$2.10)
|
|
US$0.50
|
|
|
|
|
|
|
|
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|
|
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|
Number of shares used
in computation of net income (loss) per share:
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|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,165,088,417
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|
4,165,088,417
|
|
4,163,822,242
|
|
4,164,670,997
|
|
4,158,769,098
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|
Diluted
|
|
4,165,088,417
|
|
4,165,088,417
|
|
4,163,822,242
|
|
4,164,670,997
|
|
4,158,769,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used
in computation of net income (loss) per ADS:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
83,301,768
|
|
83,301,768
|
|
83,276,445
|
|
83,293,420
|
|
83,175,382
|
|
Diluted
|
|
83,301,768
|
|
83,301,768
|
|
83,276,445
|
|
83,293,420
|
|
83,175,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
(13.8)
|
|
(45.7)
|
|
25.1
|
|
(34.4)
|
|
51.3
|
|
Pension
adjustments
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Comprehensive income
(loss)
|
(178.4)
|
|
(87.0)
|
|
56.1
|
|
(209.3)
|
|
92.6
|
View original
content:http://www.prnewswire.com/news-releases/hanwha-q-cells-reports-third-quarter-2018-results-300758143.html
SOURCE Hanwha Q CELLS Co., Ltd.