Suntech Power has announced their Q2 2007 financial results.
“I am pleased to report excellent results for the second quarter,” said Dr. Zhengrong Shi, Suntech’s Chairman and CEO. “We once again exceeded our output target as we saw unprecedented demand for Suntech’s high quality solar panels across a range of international markets. In fact, our sales demand has been so strong that we have already signed contracts to deliver over 150MW of our PV modules in 2008. To put that in perspective, that is nearly equal to Suntech’s entire output in 2006. As we deepen our sales channels and networks in key geographies, we believe we will continue to grow faster than our competitors as well as the underlying markets.”
“In the second quarter, our margins improved as ASPs remained in line with our expectations and silicon deliveries from our long-term suppliers returned to schedule.” Dr. Shi added, “Our MSK integration efforts combined with the strategic refocus on building-integrated photovoltaic products (BIPV) has also led to greater global sales traction and improvements in the margin impact of our MSK products.”
Commenting on Suntech’s technology, Dr. Shi said, “We are pleased with the progress of our solar innovation initiatives. Despite the success of our high performance semi-conductor finger technology, our ground-breaking 20% efficiency Pluto technology is demonstrating even more impressive results in pilot production and we are on track to commence commercial production using this technology in 2008.”
Dr. Shi continued, “Through this period of dynamic growth, we are determined to expand production capacity and increase our competitiveness by leveraging our manufacturing efficiency, technology advantages, and balanced silicon sourcing strategy.”
On a GAAP basis, second quarter gross profit was $64.3 million and gross margin was 20.3%, operating income was $38.1 million, and net income was $41.3 million or $0.25 per diluted ADS. Non-GAAP operating expenses in the second quarter of 2007 were $21.4 million and accounted for 6.7% of net revenues.
Non-GAAP income from operations for the second quarter of 2007 was $45.6 million and non-GAAP operating margin was 14.4%.
In the second quarter of 2007, capital expenditures, which were primarily related to production capacity expansion and the construction of the Wuxi and Luoyang production facilities, were $51.7 million and depreciation and amortization expenses were $4.2 million.
During the second quarter of 2007, the total number of diluted ADSs outstanding increased from 164.1 million to 168.9 million, primarily due to an increase of 4.8 million ADSs on an “as converted” basis. The additional ADSs represent the final portion of the 10.3 million ADSs that may be issued in the future as a result of the February 2007 convertible note offering of $500 million.
Suntech’s results for the second quarter of 2007 excluding MSK were as follows:
Non-GAAP operating expenses as a percentage of net revenues were 6.4%, non-GAAP income from operations was $48.5 million and non-GAAP operating margin was 16.3%, and non-GAAP net income was $50.8 million. Suntech’s successful execution of its integration initiatives was reflected in this quarter’s results as Suntech reduced its loss from MSK operations by approximately 40% from the first quarter of 2007 to $1.9 million.
Based on current operating and other conditions, Suntech expects its third quarter 2007 total production output to be in the estimated range of 94MW to 96MW.
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