Trina Solar Announces Second Quarter 2007 Results

CHANGZHOU, China, Aug. 23 /Xinhua-PRNewswire-FirstCall/ -- Trina Solar
Limited (NYSE: TSL) (''Trina Solar'' or the "Company"), an integrated
manufacturer of solar PV products based in Changzhou, China, today
announced its financial results for the second quarter of 2007.
Second Quarter 2007 Highlights
-- Total net revenues increased 77.0% sequentially and 160.4% year-over-
year to $75.3 million
-- Gross profit increased 49.5% sequentially and 78.7% year-over-year to
$14.2 million
-- Net income increased 51.4% sequentially and 540.0% year-over-year to
$7.2 million
-- Solar module shipments increased 93.3% to 20.33 MW from 10.52 MW in the
first quarter of 2007 and 187.6% from 7.07 MW in the second quarter of
2006
''We are extremely pleased with our record results for the second
quarter of 2007. We experienced continued strong growth in both revenues
and profits, while further demonstrating the strengths of our sales and
marketing, organizational capability, and strong brand in strategic
European markets, such as Germany, Spain, and Italy. In addition, we have
achieved key milestones in the execution of our business plan with the
successful commercial launch of our solar cell manufacturing lines, taking
us one step closer to becoming a fully vertically integrated solar PV
manufacturer,'' said Mr. Jifan Gao, Trina Solar's Chairman and CEO.
Second Quarter 2007 Results
Trina Solar's net revenues in the second quarter of 2007 were $75.3
million, an increase of 77.0% sequentially and 160.4% year-over-year. Total
shipments increased to 20.33 MW, up from 10.52 MW in the first quarter of
2007 and 7.07 MW in the second quarter of 2006. Average sales price
(''ASP'') was $3.70 in the second quarter of 2007, compared to $3.80 in the
first quarter of 2007, and $4.03 in the second quarter of 2006. Sales to
customers in Europe accounted for almost all of Trina Solar's revenues in
the second quarter of 2007.
At June 30, 2007, Trina Solar's ingot, wafer, and module annual
manufacturing capacities were 100 MW. In April 2007, Trina Solar commenced
commercial production of its newly installed solar PV cell lines that are
currently delivering an average cell efficiency of 16.3% and have an annual
manufacturing capacity of approximately 50 MW. The Company plans to achieve
an annual manufacturing capacity of 150 MW for its ingot, wafer, cell and
module production by the end of 2007.
Cost of revenues in the second quarter of 2007 was $61.1 million, an
increase of 84.9% sequentially and 191.4% year-over-year due to growth of
Trina Solar's solar module business. Cost of revenues in the second quarter
of 2007 included approximately $15,000 of share-based compensation
expenses.
Gross profit in the second quarter of 2007 was $14.2 million, an
increase of 49.5% sequentially and 78.7% year-over-year. Gross margin was
18.9% in the second quarter of 2007, a decrease from 22.3% in the first
quarter of 2007 and 27.5% in the second quarter of 2006. The sequential and
year-over-year decline in gross margin was due primarily due to a lower
module ASP.
Operating expenses in the second quarter of 2007 were $6.1 million, an
increase of 21.6% sequentially and 21.7% year-over-year. The sequential and
year-over-year increases were primarily due to higher selling expenses and
general and administrative expenses to support the rapid growth of the
Company's business. Operating expenses in the second quarter of 2007
included approximately $296,000 of share-based compensation expenses.
Operating income in the second quarter of 2007 was $8.1 million, an
increase of 81.0% sequentially and 177.2% year-over-year. Operating margin
was 10.7% in the second quarter of 2007, compared to 10.5% in the first
quarter of 2007 and 10.1% in the second quarter of 2006.
Interest expense in the second quarter of 2007 was $1.6 million,
compared to $1.2 million in the first quarter of 2007 and $0.5 million in
the second quarter of 2006. The sequential increase was due to additional
bank borrowings in the second quarter of 2007.
The Company recorded an income tax benefit of $56,000 in the second
quarter. The Company received approval from the tax authority of additional
tax benefit in the second quarter under qualified export enterprise
classification.
Net income from continuing operations reached $7.2 million in the
second quarter of 2007, an increase of 53.2% sequentially and 280.6%
year-over-year.
Net income was $7.2 million in the second quarter of 2007, an increase
of 51.4% sequentially and 540.0% year-over-year.
First Half 2007 Results
Revenues for the six months ended June 30, 2007 increased 171.7% over
the comparable period in 2006, to $117.9 million. Gross profit increased
89.3% over the comparable period in 2006, to $23.7 million, yielding a
gross margin of 20.1%. Operating expenses in the first half of 2007
increased 83.9% over the comparable period in 2006 to $11.2 million as a
result of the Company's rapid growth. Operating income in the first half of
2007 was up 94.4% over the comparable period in 2006 to $ 12.6 million,
reflecting an operating margin of 10.7%.
Net income for the six months ending June 30, 2007 was $12.0 million,
an increase of 201.6% over the comparable period in 2006.
Financial Condition
As of June 30, 2007, the Company had $173.5 million in cash and cash
equivalents and working capital of $224.9 million. Total bank borrowings
stood at $114.8 million, $5.3 million of which were long-term borrowings.
Shareholders' equity was $335.6 million, up from $171.6 million at the end
of the first quarter 2007.
Business Outlook
The Company affirms its previous guidance of total net revenues in the
range of $270 million to $300 million and net income in the range of $34.5
million to $36.5 million for the full year 2007. The Company expects to
ship between 75 MW to 80 MW of modules for the full year 2007.
Trina Solar is on track to meet its year end capacity expansion goals
of 150 MW and 350 MW for 2007 and 2008, respectively. The Company has
successfully upgraded its infrastructure, including installation of
utilities such as electrical power supply and new water cooling facilities.
In line with its technology roadmap, Trina Solar has achieved commercial
production of wafers of 200-micron thickness from 220-micron thickness to
reduce the usage of silicon during the third quarter. Such wafers currently
account for over 70% of its output, with the remaining wafers being
produced at 220-micron thickness. We are currently converting our remaining
equipment to produce all wafers of 200-micron thickness by the end of the
third quarter.
In terms of polysilicon supply, the Company has entered into contracts
covering approximately 90% and 60% of its 2007 and 2008 feedstock
requirements, respectively, and continues to pursue an optimal mix of
short-term and medium- term contracts with polysilicon manufacturers,
semiconductor companies and silicon reclamation companies.
''Our outlook is positive as recent sales contracts have confirmed our
strengths to successfully execute our sales and marketing strategies in key
European markets, particularly in Southern Europe where climatic conditions
and government policies are more favorable towards the solar power
industry. Market demand is still extremely strong, and we are currently
sold out through the rest of the year. With additional cell lines and ingot
and wafer capacities being installed for production in the fourth quarter,
we are on track to realize increased scale efficiencies under a vertically
integrated business model. Our focus remains to achieve cell efficiencies
in excess of 16.5% by the year end, to enhance our product quality and to
improve our cost structure, especially in the area of silicon feedstock
utilization,'' said Mr. Gao. ''Our efforts to expand our geographic
footprint into new markets and diversify our customer base have proven
increasingly successful, as evidenced by an increasing percentage of new
customers from Spain and Italy during the quarter. Going forward, our sales
force will continue to target large and medium-sized companies in these and
other markets."
During the second quarter of 2007, the Company diversified its revenue
base by adding 12 new customers to end the quarter with approximately 30
active customers and a total portfolio of over 50 customers. The geographic
breakdown of our sales for the second quarter was approximately 57%
Germany, 28% Spain, and 11% Italy, thus bringing our first half of 2007
geographic breakdown to approximately 40% Germany, 31% Spain, and 15%
Italy.
Recent Events
On May 21, 2007, Trina Solar announced the appointment of Mr. Qian Zhao
as independent director to the Company's Board of Directors. Mr. Zhao is a
lawyer by training and has practiced law for 17 years specializing in
corporate finance, cross-border investments, securities and M&A.
On May 31, 2007, the Company raised approximately US$155 million in net
proceeds through its follow-on offering of 3,600,016 American Depository
Shares. The net proceeds will be used to expand manufacturing lines for the
production of silicon ingots, wafers, solar cells and modules, research and
development, raw materials purchases and general working capital purposes.
On July 9, 2007, the Company confirmed initial shipments on four
recently signed contracts covering 88 to 99 MW of sales to new key accounts
in Italy and Germany over the next two to three years.
Conference Call
The company will host a conference call at 8:00 a.m. ET on August 23,
2007, to discuss the results for the quarter ended June 30, 2007. Joining
Jifan Gao, Trina Solar's Chairman and Chief Executive Officer, will be Sean
Shao, Chief Financial Officer, Sean Tzou, Chief Operations Officer, Andy
Klump, Vice President of Business Development, Arturo Herrero, Vice
President of Sales and Marketing, and Thomas Young, Director of Investor
Relations. To participate in the conference call, please dial the following
number five to ten minutes prior to the scheduled conference call time: (+1
888) 482-0024. International callers should dial (+1 617) 801-9702. The
passcode for the call is 13859684.
If you are unable to participate in the call at this time, a replay
will be available on Thursday, August 23 at 10:00 a.m. ET, through
Thursday, August 30, at 10:00 at 10:00 a.m. ET. To access the replay, dial
(+1 888) 286-8010, international callers should dial (+1 617) 801-6888 and
enter the passcode 87710119. Callers in Southern China may also dial 10 800
130 0399.
This conference call will be broadcast live over the Internet and can
be accessed by all interested parties on Trina Solar's website at
http://www.trinasolar.com . To listen to the live webcast, please go to
Trina Solar's website at least fifteen minutes prior to the start of the
call to register, download, and install any necessary audio software. For
those unable to participate during the live broadcast, a replay will be
available shortly after the call on Trina Solar's website for 90 days.

About Trina Solar Limited

Trina Solar Limited (NYSE: TSL), through its wholly-owned subsidiary
Changzhou Trina Solar Energy Co., Ltd., is an integrated solar PV
manufacturer based in China. The company began research and development
efforts in solar products in 1999 and in 2002 it started the system
integration business. The company moved into the assembly of solar modules
in 2004 as well as the manufacturing of monocrystalline ingots, wafers and
cells in 2005, 2006 and 2007, respectively. The company's solar modules
provide reliable and environmentally-friendly electric power for
residential, commercial, industrial and other applications worldwide. The
company sells its products to customers around the globe, including a
number of European countries, such as Germany, Spain and Italy, where
government incentives have accelerated the adoption of solar power. For
further information, visit the company's website at
http://www.trinasolar.com .