On August 21, 2024, Emeren Group Ltd (SOL, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. Emeren Group Ltd is a solar project developer and operator, focusing on solar power project development, EPC services, and electricity generation. The company generates maximum revenue from its EPC business, with significant contributions from Poland, the United States, Hungary, Spain, France, the United Kingdom, Germany, Italy, and China.
Performance Overview
In Q2 2024, Emeren Group Ltd reported revenue of $30.1 million, a 106% increase from $14.6 million in Q1 2024 but an 11% decrease from $33.8 million in Q2 2023. The company achieved a gross profit of $9.4 million, translating to a gross margin of 31.2%. Operating profit stood at $3.0 million, while net income was $0.4 million. The net income was impacted by a $2.0 million write-off related to canceled projects and an unrealized foreign exchange loss of $0.8 million.
Revenue Breakdown
| Segment ($ in thousands) | Q2 2024 Revenue | % of Total Revenue |
|---|---|---|
| Project development | $5,884 | 20% |
| IPP | $8,690 | 29% |
| EPC | $12,365 | 41% |
| DSA and others | $3,118 | 10% |
| Total | $30,057 | 100% |
Geographical Revenue Distribution
| Region ($ in thousands) | Q2 2024 Revenue | % of Total Revenue |
|---|---|---|
| Europe | $23,419 | 78% |
| USA | $394 | 1% |
| China | $6,244 | 21% |
| Total | $30,057 | 100% |
Financial Metrics and Analysis
Emeren Group Ltd's gross profit for Q2 2024 was $9.4 million, compared to $4.3 million in Q1 2024 and $12.7 million in Q2 2023. The gross margin was 31.2%, down from 37.4% in Q2 2023, primarily due to a shift in the revenue mix towards COD sales. Operating expenses were $6.4 million, down from $7.6 million in Q2 2023 but higher than the $5.5 million in Q1 2024.
Net income attributable to Emeren Group Ltd’s common shareholders was $0.4 million, a significant improvement from a net loss of $5.9 million in Q1 2024 but lower than $8.3 million in Q2 2023. Diluted net income per American Depositary Share (ADS) was $0.01, compared to a diluted net loss of $0.11 in Q1 2024 and diluted net income of $0.14 in Q2 2023.
Cash Flow and Financial Position
Cash used in operating activities was $2.2 million; cash used in investing activities was $3.8 million, and cash provided by financing activities was $1.5 million. Cash and cash equivalents at the end of Q2 2024 were $50.8 million, compared to $55.1 million in Q1 2024. The debt-to-asset ratio at the end of Q2 2024 was 10.2%, compared to 9.99% at the end of Q1 2024.
Outlook
Emeren Group Ltd anticipates Q3 2024 revenue to range between $25 to $28 million, with a gross margin between 35% and 38%. For the full year 2024, the company expects revenue to range from $150 to $160 million and a gross margin of approximately 30%. Net income for 2024 is expected to be around $22 million, with earnings per ADS of approximately 43 cents. The company also expects 2024 IPP revenue to be between $24 million and $26 million, with a gross margin of approximately 50%.
Emeren Group Ltd's strategic focus on expanding its DSA partnerships and optimizing its development pipeline positions it well in the growing solar markets. The company's ability to adapt and maintain operational efficiency amidst challenges underscores its resilience and potential for future growth.
Explore the complete 8-K earnings release (here) from Emeren Group Ltd for further details.
