Trina Solar Limited (TSL)

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Trina Solar Limited (TSL)

Q1 2013 Results Earnings Call

May 29, 2013 8:00 AM ET

Executives

Kevin Zhang - Head, Investor Relations

Jifan Gao - Chairman and CEO

Terry Wang - Chief Financial Officer

Zhiguo Zhu - President, Module Business Unit

Analysts

Vishal Shah - Deutsche Bank

Brandon Heiken - Credit Suisse

Sanjay Shrestha - Lazard Capital Markets

Dan Ries - Maxim Group

Gordon Johnson - Axiom Capital Management

Rob Stone - Cowen and Company

Mahesh Sanganeria - RBC Capital Market

Shar Pourreza - Citigroup

Nimal Vallipuram - Gilford Securities

Pranab Sarmah - Daiwa Capital Markets

Presentation

Operator

Good morning, everyone. My name is Sarah, and I will be your conference operator today. At this time, I’d like to welcome everyone to the Trina Solar First Quarter 2013 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

Thank you, Sarah. Good day to all and welcome to Trina Solar’s first quarter 2013 earnings conference call. This is Kevin Zhang, Trina Solar’s Head of Investor Relations. With us today are Trina Solar’s Chairman and CEO, Mr. Jifan Gao; Chief Financial Officer, Mr. Terry Wang; and President of Trina Solar’s Module Business Unit, Mr. 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 refer you to a more detailed discussion of the risks and uncertainties in the company’s filings with the Securities and Exchange Commission.

For those of you unable to listen to the entire call at this time, a recording will be made available via webcast for 90 days at the Investor Relations section of our website at www.trinasolar.com.

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

Jifan Gao

Thank you, Kevin, and thank you everyone for joining us today. While ASP of modules continued to decline in the first quarter, we are cognitive to see that the rate of decline slowed from previous quarter.

Furthermore, we see that the balance between supply and demand has improved in the PV industry and the price has show signs of stabilizing. In this environment, we continue to focus on improving operational efficiency and exercising financial discipline.

In the first quarter, we achieved manufacturing cost reductions that outweighed the fall in ASP, we also led seasonal amount of overdue account receivables. These efforts allowed us to maintain strong liquidity and robust balance sheet which makes us better position to capture future growth opportunities.

As announced before, we completed several restructuring initiatives in the second half of 2012. In the first quarter of 2013, we saw sustain benefits from the majors in our G&A expense, where we are continue to strictly control operating costs, we are maintaining our production, quality and service capabilities.

In terms of revenues, we continue to expand significantly and gain penetration in emerging and high growth markets. We achieved the strong quarter-to-quarter growth in shipment to Japan and India, two key markets for the global PV industry.

Meanwhile, we maintained a strong shipment for Australia in…

Operator

Ladies and gentlemen, this is the operator, we are experiencing some technical difficulties, please hold while we reconnect the speaker.

Jifan Gao

Thank you. Okay. We continued to build on momentum and solidified our market leading position which was recently recognized by Solar Business Services who ranked Trina Solar number one in Australia PV market in 2012 based on market share.

Meanwhile, in Europe, we are worked to retain quality customers and expand our company base. In the first quarter, each strong demand in (inaudible) for us, we’ve seen significant market share in the region.

While we continue to monitor development in EU extend tariffs in Chinese solar products. China solar remained committed to continue to serve our customer and business partners in Europe and around the world.

Finally, I would like to update you our downstream systems business a key [portfolio] for company’s future development. At the beginning of the year, we announced that company had successfully won 50-megawatt solar project in Gansu province, China. We began construction on the project at the end of first quarter and expect to complete project by the third quarter of 2013.

With that, I will now like to turn the call to our CFO, Terry Wang to share our first quarter 2013 financial results and other updates. Terry?

Terry Wang

Thank you, Mr. Gao, and welcome everyone to our call. I would like to present an overview of our first financial results followed by the company’s guidance for the second quarter and full year of 2013.

Due to improving supply/demand balance and pricing for rationalization module ASP fall has been decentralized their rating. ASP in the first quarter saw a 6% drop Q-on-Q, compared to our average $0.10 loss on each quarter last year.

Our cost improved noticeably is regarding higher carrying costs for some of our inventory and other relative items. We achieved a gross margin expansion in the first quarter. However, overall gross profits were insufficient to cover operating expenses resulting negative operating and bottom line income.

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