Emeren Group Ltd.’s SOL share price surged 5.9% to reach $1.96 on August 21, following the company’s latest quarterly release. While the company missed earnings expectations, investors were encouraged by other aspects of the report, particularly the revenue performance.
Emeren reported an income per American Depositary Share (ADS) of a penny for the second quarter of 2024, falling short of the Zacks Consensus Estimate of 7 cents by 85.7%. This figure also reflects a significant 92.9% decline from the year-ago quarter’s reported figure of 14 cents per share.
Despite the earnings miss, Emeren’s second-quarter net revenues of $30.1 million exceeded the Zacks Consensus Estimate of $23 million by 30.9%. However, the revenue figure also marked a decline of 11.2% from the $33.9 million reported in the same period last year.
As of June 30, 2024, Emeren had 264 megawatts of projects in operation, including 80 MW in Europe, 24 MW in the United States, and 160 MW in China. During the second quarter, the company continued to expand its advanced and early-stage solar development project pipeline, reaching 7,844 MW.
Emeren’s operating expenses amounted to $6.4 million in the reported quarter, down 15.7% year over year. This resulted in a gross profit of $9.4 million for the quarter, compared to $12.7 million in the year-ago period. The company reported an operating income of $3 million, down from $5 million in the prior-year quarter.
In terms of its financial condition, Emeren held cash and cash equivalents of $50.8 million as of June 30, 2024, compared with $70.2 million as of December 31, 2023. The company’s long-term debt totaled $22.9 million as of June 30, 2024, slightly up from $22.7 million as of December 31, 2023. The cash outflow from operating activities totaled $9 million as of June 30, 2024, compared with a cash outflow of $26.1 million in the same period last year.
Looking ahead, Emeren projects revenues in the range of $25-$28 million for the third quarter of 2024 and expects a gross margin of 35-38% for the same period. The Zacks Consensus Estimate for 2024 sales is pegged at $27.5 million, which aligns with the midpoint of the guidance range.
For 2024, Emeren reaffirmed its guidance, expecting to generate revenues in the range of $150-$160 million. The Zacks Consensus Estimate for 2024 earnings, pegged at $150.3 million, falls near the lower end of the company’s guidance. Emeren also continues to expect its earnings per ADS to be 43 cents during 2024, a figure significantly higher than the Zacks Consensus Estimate of 27 cents. The company expects a gross margin of 30% for 2024.
Emeren Group currently carries a Zacks Rank #4 (Sell).
In addition to Emeren’s earnings release, other solar companies also reported their second-quarter results. First Solar, Inc. (FSLR) exceeded both earnings and revenue expectations, while Enphase Energy, Inc. (ENPH) missed both. Nextracker Inc. (NXT) reported strong first-quarter fiscal 2025 earnings and revenue, exceeding expectations.
