Trina Solar Limited (TSL)

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Trina Solar Limited (TSL)

Q4 2012 Earnings Conference Call

February 26, 2013 08:00 ET

Executives

Kevin Zhang - Manager, Investor Relations

Jifan Gao - Chairman and Chief Executive Officer

Terry Wang - Chief Financial Officer

Zhiguo Zhu - Senior Vice President and President, Module Business Unit

Analysts

James Medvedeff - Cowen

Brandon Heiken - Credit Suisse

Vishal Shah - Deutsche Bank

Amir Rozwadowski - Barclays

Sanjay Shrestha - Lazard Capital Markets

Mahesh Sanganeria - RBC Capital

Pranab Sarmah - Daiwa Capital Markets

Amy Song - Goldman Sachs

Aaron Chew - Maxim Group

Shar Pourreza - Citigroup Global

Gordon Johnson - Axiom Capital Management

Presentation

Operator

Good morning everyone. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome you all to the Trina Solar Fourth Quarter and Full Year 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

I’d now like to turn the call over to our host, Mr. Kevin Zhang. You may begin your conference.

Kevin Zhang - Manager, Investor Relations

Thank you, operator. Good day to all and welcome to Trina Solar’s fourth quarter and full year 2012 earnings conference call. On behalf of Thomas Young, this is Kevin Zhang, Trina Solar’s Manager of Investor Relations. With us today are Trina Solar’s Chairman and CEO, Jifan Gao; Chief Financial Officer, Terry Wang; and SVP and President of Trina Solar’s Module Business Unit, Zhiguo Zhu.

Before I turn the call over to Mr. Gao, may I remind our listeners that in this call, management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from those discussed today and therefore we will refer you to a more detailed discussion of the risks and uncertainties in the company’s filings with the Securities and Exchange Commission. In addition, any projections as to the company’s future performance represent management’s estimates as of today, February 26, 2013. Trina Solar assumes no obligation to update these projections in the future as market conditions change. For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days at the Investor Relations section of Trina Solar’s website at trinasolar.com.

With that, it is my pleasure to turn the call over to Trina Solar’s Chairman and CEO, Mr. Jifan Gao for our fourth quarter opening remarks.

Jifan Gao - Chairman and Chief Executive Officer

Thank you, Kevin. And thank you everyone for joining us today. During the fourth quarter, supply demand imbalance and aggressive pricing in the marketplace continued to impact our business and financial performance resulting in negative loss. In such environment, we have made important in key operating areas such as the inventory management, account receivables collection, and manufacturing cost reduction. (indiscernible) of our effects we achieved around $75 million positive operating cash flow in the fourth quarter.

In fourth quarter, we show positive effects of our streamlining and the structured effects in our global business units. Further progress was also made in the advancement of our in-house system business opportunities in China and the Americas, which include our recently announced 50-megawatt project in Gansu Province. Despite challenging market conditions, including challenges in government policy in some European markets, we believe continued improvements through low gross margin and the total system costs will drive increased global demand in 2013. At the same time, we see increased PV adoption in new markets with the Africa, the Americas, and the Middle East. We are also encouraged by recent announcements in Asia, mostly notably in China and Japan that the governments are encouraging solar energy and raising targets in order to increase solar power’s contribution in grid power.

In the fourth quarter, our China shipments grew sharply, accounting for around 32% of our revenue. For 2013, China has announced a 10 gigawatt installation target, under this supportive environment, the company looks to capture more domestic opportunities in post-utility scale and distributed PV projects. Into the New Year, we continued to execute our strategy to expand our projector systems in this – as a percentage of our overall revenues. Additionally, where we will drive new products owned from our innovation and research such as frameless fiberglass module. Lastly we will expand service and solution confidence through partnerships with the PV industry leading global technology developers. These efforts were recently recognized by Fast Company Magazine, which named Trina Solar in the list of the world’s Top 10 most innovative companies in China.

In summary we believe such a business development and revenue strategies combined with our long-standing attention to maintaining balance sheet strength will further solidify our Trina Solar’s position as brand and a partner of choice across these end user segments.

With that I would now like to turn the call to our CFO, Terry Wang, to share our fourth quarter 2012 financial results and other updates. Terry?

Terry Wang - Chief Financial Officer

Thank you, Mr. Gao, and welcome everyone to our call. I would like to present an overview of our fourth quarter and full year financial results followed by the company’s guidance for the first quarter and full year of 2013. Due to lingering supply demand imbalance effect and aggressive pricing in the marketplace, the fourth quarter saw continued ASP declines. Our costs improved noticeably, which help us maintain positive gross margin. But due to higher carrying costs for some of our inventory, gross profits were insufficient to cover operating expenses resulting a negative operating and the bottom line income.

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