Emeren(US:SOL)2024-08-19 20:36PART I. FINANCIAL INFORMATION Financial Statements Emeren Group reported a net loss of $4.7 million on $44.7 million in net revenues for the first half of 2024, driven by foreign exchange losses and lower gross profit Unaudited Condensed Consolidated Balance Sheets Total assets decreased to $457.8 million as of June 30, 2024, with corresponding declines in liabilities and shareholders' equity Consolidated Balance Sheet Summary (in thousands USD) | Balance Sheet Items | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $217,859 | $226,450 | | Total Assets | $457,751 | $478,351 | | Total Current Liabilities | $51,046 | $56,992 | | Total Liabilities | $110,230 | $115,042 | | Total Shareholders' Equity | $347,521 | $363,309 | Unaudited Condensed Consolidated Statements of Operations Q2 2024 net revenues decreased to $30.1 million, resulting in a net income of $0.4 million, while the six-month period saw a net loss of $5.5 million due to lower revenues and foreign exchange losses Statement of Operations Summary (in thousands USD) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Net Revenues | $30,057 | $33,846 | $44,657 | $46,722 | | Gross Profit | $9,382 | $12,662 | $13,704 | $14,255 | | Income from Operations | $2,959 | $5,046 | $1,743 | $2,043 | | Net Income (Loss) to Emeren | $392 | $8,348 | $(5,533) | $8,154 | | Basic EPS (per ADS) | $0.01 | $0.15 | $(0.11) | $0.14 | - Foreign exchange fluctuations significantly impacted results, with a loss of $0.8 million in Q2 2024 compared to a gain of $2.1 million in Q2 2023, and a loss of $4.1 million in the first six months of 2024 versus a gain of $4.8 million in the prior year period15 Unaudited Condensed Consolidated Statements of Cash Flows Operating activities used $9.0 million in cash for the first half of 2024, contributing to a total cash and cash equivalents decrease of $19.3 million Cash Flow Summary (in thousands USD) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,000) | $(26,081) | | Net cash used in investing activities | $(6,453) | $(1,750) | | Net cash used in financing activities | $(6,704) | $(14,990) | | Net decrease in cash | $(19,344) | $(46,832) | - Share repurchases were a significant use of cash in financing activities, amounting to $7.2 million in the first six months of 202424 Notes to Unaudited Condensed Consolidated Financial Statements Notes detail the company's solar project operations, significant customer credit risk, geographic revenue concentration, and share repurchase activities - The company operates as a solar project developer and operator with business in the United States, Poland, Hungary, Spain, France, UK, Germany, Italy, and China26 - As of June 30, 2024, a single solar power customer represented 61% of the company's total receivables, amounting to $44.5 million64 - In the first half of 2024, the company repurchased 33,988,150 of its ordinary shares at a cost of $7.2 million under its accelerated stock repurchase program98 Revenue by Segment - Six Months Ended June 30, 2024 (in thousands USD) | Segment | Net Revenue | Gross Profit | | :--- | :--- | :--- | | Solar power project development | $5,884 | $1,883 | | Electricity generation | $14,074 | $7,663 | | EPC services | $16,502 | $1,716 | | DSA | $8,161 | $2,414 | | Others | $36 | $28 | | Total | $44,657 | $13,704 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q2 2024 revenue was $30.1 million, impacted by project write-offs and foreign exchange losses, while the company focuses on DSA and BESS expansion with a substantial project pipeline - Q2 2024 revenue was $30.1 million with a gross margin of 31.2%141 - Net income of $0.7 million was negatively affected by a $1.7 million write-off of cancelled U.S. projects and a $0.8 million unrealized foreign exchange loss141 - The company's growth strategy is focused on expanding the Development Service Agreement (DSA) and Battery Energy Storage Systems (BESS) businesses in Europe and the U.S141142 Project Pipeline as of June 30, 2024 (in MW) | Pipeline Type | Advanced Stage | Early Stage | Total | | :--- | :--- | :--- | :--- | | Solar Development | 2,534 | 5,310 | 7,844 | | Solar Storage | 3,636 | 4,237 | 7,873 | Results of Operations Net revenue decreased to $44.7 million for the first half of 2024, resulting in a net loss of $4.7 million, primarily due to lower project development revenue and significant foreign exchange losses - For the six months ended June 30, 2024, net revenue decreased to $44.7 million from $46.7 million year-over-year, primarily due to a decrease in solar power project development revenue179 - Gross margin for the three months ended June 30, 2024, decreased to 31.2% from 37.4% in the prior-year period, primarily due to unfavorable margins within EPC services166 - A foreign exchange loss of $4.1 million in the first half of 2024, compared to a gain of $4.8 million in the same period of 2023, was a primary driver of the net loss185188 Liquidity and Capital Resources The company maintains $167 million in working capital and $50.8 million in cash, deemed sufficient for the next 12 months despite negative operating cash flow - The company had a negative operating cash flow of $9.0 million for the six months ended June 30, 2024189201 - As of June 30, 2024, the company reported positive working capital of $167 million and cash and cash equivalents of $50.8 million189190 - Net cash used in financing activities decreased to $6.7 million from $15.0 million year-over-year, mainly due to a reduction in share repurchases199201 Quantitative and Qualitative Disclosures about Market Risk This disclosure is not applicable as the company qualifies as a smaller reporting company - The company has not provided this disclosure as it is not applicable to smaller reporting companies204 Controls and Procedures Disclosure controls and procedures were deemed ineffective due to a persistent material weakness in financial reporting review at subsidiaries, despite other remediated weaknesses - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024205 - A material weakness in internal control over financial reporting persists, relating to ineffective review and approval procedures over financial reporting at certain subsidiaries205 - The company has successfully remediated two previously identified material weaknesses concerning the availability of historical accounting documents and the accounting for lease deposits205208 PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal matters, with no expected material adverse effect on its financial position - Information regarding legal proceedings is detailed in Note 16 of the financial statements210 Risk Factors No material changes to risk factors have occurred since the December 31, 2023 Annual Report on Form 10-K - Risk factors have not materially changed from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023211 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 4.7 million ordinary shares for $0.22 per share in Q2 2024, with $0.9 million remaining in its ASR program Share Repurchases in Q2 2024 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30, 2024 | 4,729,870 | $0.22 | | May 1 - May 31, 2024 | — | — | | June 1 - June 30, 2024 | — | — | | Total | 4,729,870 | | - As of June 30, 2024, approximately $0.9 million was left under the company's $10 million accelerated stock repurchase program212 Other Information No directors or officers modified, adopted, or terminated Rule 10b5-1(c) trading plans during Q2 2024 - No modifications were made by directors or officers to Rule 10b5-1(c) trading plans during the quarter214 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes required certifications from the CEO and CFO, as well as XBRL interactive data files215