Yahoo Finance JinkoSolar Holding Co., Ltd. (NYSE:JKS) Q1 2024 Earnings Call Transcript
JinkoSolar Holding Co., Ltd. (NYSE:JKS) Q1 2024 Earnings Call Transcript April 29, 2024
JinkoSolar Holding Co., Ltd. beats earnings expectations. Reported EPS is $0.39, expectations were $-0.44. JKS isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello, ladies and gentlemen, and thank you for standing by for JinkoSolar Holding Co. Ltd. First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host for today's call, Ms. Stella Wang, JinkoSolar's Investor Relations. Please proceed.
Stella Wang: Thank you, operator. Thank you, everyone for joining us today for JinkoSolar's first quarter 2024 earnings conference call. The company's results were released earlier today and available on the company's IR website at www.jinkosolar.com, as well as on Newswire services. We have also provided a supplemental presentation for today's earnings call, which can also be found on the IR website. On the call today from JinkoSolar are Mr. Xiande, Chairman and CEO of JinkoSolar Holding Company Limited; Mr. Gener Miao, CMO of JinkoSolar Company Limited; Mr. Pan Li, CFO of JinkoSolar Holding Company Limited; and Mr. Charlie Cao, CFO of JinkoSolar Company Limited. Mr. Li will discuss JinkoSolar's business operations and the company highlights followed by Mr. Miao, who will talk about the sales and marketing.
And then, Mr. Pan Li, who will go through the financials. We will be available to answer your questions during the Q&A session that follows. Please note that today's discussion will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our future results may be materially different from the views expressed today. Further information regarding this and other risks is included in JinkoSolar's public filings with the Securities and Exchange Commission. JinkoSolar does not assume any obligation to update any forward-looking statements, except as required under the applicable law. It's now my pleasure to introduce Mr. Xiande, Chairman and CEO of JinkoSolar Holdings.
Mr. Li will speak in Mandarin and I’ll translate his comments into English. Please go ahead, Mr. Li.
Xiande Li: [Foreign Language] [Interpreted] We are happy to announce that thanks to our advantages of N-type TOPCon technology, competitive products, global marketing and manufacturing layout, of module shipments grew 53.3% year-over-year to nearly 20 gigawatts in the first quarter ranking first in the industry. The proportion of N-type shipments increased to nearly 80% in the first quarter from approximately 70% in the fourth quarter last year, maintaining our leading position in the industry. Module prices continued to fall in the first quarter, while the industry average utilization rates declined sharply. We've maintained our leading utilization rate at high level. Over 70% of the modules were shipped to overseas markets in the first quarter, while proportion of shipments to Europe and the U.S. significantly increased sequentially.
Gross margin was 11.9%, flat sequentially. Net income was $84.4 million, up 19.8 times sequentially. Adjusted net income was $65.1 million, up 1.6% sequentially. Newly added installations in China reached 45.7 gigawatts in the first quarter, an increase of 35.9% year-over-year. Module exports totaled 61.7 gigawatts, an increase of over 20% year-over-year. The PV industry remains one of the few sectors maintaining a higher growth rate, and we expect the global PV demand to grow approximately 25% to 30% in 2024. Coming into the second quarter, polysilicon prices continued to decline as flight expense demand. On the other hand, macroeconomic conditions push the commodity prices higher while increasing market demand drove prices of raw materials such as glass and a film higher.
All those factors combined to keep recent model prices relatively stable at a low level. In the short term, the profitability of integrated solar companies is expected to come under pressure. Yet, this distinction in operating capabilities performance of different companies will have larger difference. We expect that overall production capacity in other industry will shrink with the elimination of weaker players that like market competitiveness, sustainable production capabilities and the ability to regularly upgrade and iterate technology, facing various external challenges, we will focus on enhancing our competitiveness, and we are confident to maintain relative advantages compared to our first tier peers. In the first quarter, since there is a changing market environment, we flexibly adjusted our sales strategies to better balance shipments and profitability, leveraging our global footprints and the competitive product, our order book visibility for 2024 currently exceeds 70%.
This continued pressure along the industrial chain, we continue to deploy new technologies to improve the mass-produced efficiency of TOPCon cells and module output while reducing cost through initiatives such as optimization of supply chain and production process. We are also accelerating the clearing out of our P-type capacity. Our N-type capacity is expected to exceed 90% of total capacity by the end of 2024, and we expect our advanced capacity structure to continue to lead the industry. As a company with the largest overseas integrated capacity in the industry, we continuously work to expand the global industry chain of 1 gigawatt N-type module capacity in the U.S. has started production and another 1 gigawatt is expected to start production in the second quarter this year.
This our advantage of global operation and long accumulated experience risk management we are confident to respond to changes in international trade and continue to provide a premium products and services to our global clients. According to the latest predictions by the International Energy Agency, IEA, solar PV and wind will account for 95% of global renewable expansion, benefiting from lower generation costs than both fossil and non-fossil fuel alternatives. By 2028, the share of wind and solar PV in global electricity generation will double to 25%. Solar PV still has enormous growth potential. Meanwhile, declining cost of solar plus storage will continue to improve the economics of investing into PV storage projects and stimulate demand growth for storage projects.
We are bullish that solar plus storage will become the major model for future growth in electricity generation and we are confident to continue to lead the industry with advanced technologies and premium high-efficiency products. Before turning it over to Gener, I would like to go over our guidance for the second quarter and full year of 2024. By the end of 2024, we expect mass produce of N-type cell efficiency to reach 26.5%. We expect our annual production capacity for mono wafers, solar cells and solar modules to reach 120, 110 and 130 gigawatts, respectively, by the end of 2024. We expect module shipments to be between 24 gigawatts to 26 gigawatts for the second quarter of 2024 and between 100 gigawatts and 110 gigawatts for the full year 2024 with N-type modules accounting for nearly 90% of total module shipments.
Gener Miao: Thank you, Mr. Li. Total shipments were 21.9 gigawatts in the first quarter, with module shipment accounting for over 90%, ranking first in the industry again. And with the stressful market prices in the first quarter, we flatly (ph) adjusted our geographic mix over 70% of modules were shifted to overseas markets, especially to Asia Pacific and the emerging markets. Shipments for the U.S. were relatively stable subsidiary, while shipments to Europe increased nearly 20%, evidence of future inventories reduction. On the demand side, the general trend for global low-carbon transformation was unchanged despite problems related to installation and connection in some regions and the positive issues in others. We continuously expect a relatively rapid growth in global demand in ‘24.
Our intensive sales network and the deeply rotated local customer service infrastructure will help us to respond to market shifts and adjust flexibly day and timely, [indiscernible] client demand for more reliable, low-carbon and compliant PV products. Looking forward to the full year, we expect that the proportion of shipments to Europe and the U.S. to further increase compared to last year. Shipments of competitive high-efficiency N-type Tiger Neo modules accounted for nearly 80% overall. But far exceeding the industry average as the value of Tiger Neo is increasingly recognized by customers. In the European and emerging markets, the Tiger Neo penetration rate exceeds 90%. In terms of segment demand from distribution markets in China, Europe and Asia-Pacific was strong during the first quarter.
Closely following the market trend we raised as a ratio of distribution to approximately 50% in the quarter. We focus very strongly on building our brand regulation because an outstanding brand is key to gaining the long-term trust of our clients. Recently, we were recognized as the Tier 1 energy storage provider by Bloomberg New Energy Finance due to our outstanding products and the capabilities in energy storage, reflecting our commitment to providing safe and reliable energy storage solutions and recognition by customers for timely delivery and effective deployment capabilities. Besides, we received the AAA rating once again in the 2024 Q1 release of PV-Tech’s ModuleTech Bankability reports, which demonstrates our leadership in manufacturing activity, reliable quality, market share leadership, sound financial performance and technology innovation.
With that, I will turn the call over to Pan.
Pan Li: Thank you, Gener. We are pleased to report that our solar module shipment increased by about 53 percentage in the first quarter, where solar module price declined, we enhanced control over costs and expenses. Gross profit margin with flat and adjusted net income slightly improved sequentially. At the same time, thanks to our efforts in debt management. Our net debt improved sequentially, leveraging our advantages in N-type technology and global sales and manufacturing network. We're very confident in our growth prospects and will continue to improve the efficiency of our working capital, achieving sustainable growth in operating cash flow and enhance our resilience to risks. Let me go into more details now. Total revenue were $3.2 billion down sequentially and slightly down year-over-year.
The sequential decrease was mainly attributed to the decrease in the shipments of solar modules and year-over-year decreases was mainly attributed to the decrease in average selling price of solar modules. Gross margin was 11.9 percentage compared with 12.5 percentage in fourth quarter last year. The decreases were mainly due to the decrease in average selling price of modules. Total operating expenses for $426 million, down 18 percentage sequentially. The sequential decrease was mainly due to the decrease in the shipments of solar modules and lower expense in relation to the segment of a dispute with one of our customers. Total operating expenses accounted for 13 percentage of total revenues compared with 11 percentage in the fourth quarter and until the first quarter of '23.
Net income attributed to JinkoSolar Holding ordinary shareholders was about $84.4 million, up nearly 20 times sequentially. Excluding the impact from a change in fair value of the note, a change in fair value of long-term investments and share-based compensation expenses, adjusted net income was about $65 million, slightly up sequentially. Moving to the balance sheet. At the end of the first quarter, our cash and cash equivalents were $2.44 billion compared with $2.69 billion in the fourth quarter of '23 and slightly improved from $1.48 billion in the first quarter of '23. AR turnover days were 100 days compared with 76 days in the fourth quarter, and 95 days in the first quarter of last year. Inventory turnover days were 89 days compared with 57 days in the fourth quarter and 100 days in the first quarter of last year.
At end of the first quarter, total debt was $3.66 billion compared to $4.38 billion in the fourth quarter of '23. Net debt was $1.22 billion compared to $1.63 billion in the fourth quarter of '23, a continuous improvement in our debt structure. This concludes our prepared remarks. We're now happy to take your questions. Operator, please proceed.
Operator: Thank you. [Operator Instructions] The first question comes from Brian Lee. Please go ahead.
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