The U.S. based photovoltaics manufacturer recorded a "better than expected" fourth quarter (Q4) of 2011, thus helping it to secure full year (FY) 2011 revenue and shipment records. Despite this positivity, gross margin and net income plummeted. While the analysts at Jefferies believe that Q4 was successful, they state that there is "no visibility to 2012 profitability". As such, it is "too early to get excited".
Specifically, they say that there are still many issues with module costs, with Chinese competition placing heavy pressure on other suppliers. "Only when sold as a system or in a lease is the full value of higher efficiency [SunPower] panels monetized," write the analysts. They add that in Q4 2011, SunPowers module costs were sitting at $1.46 per watt (/w) and efficiency adjusted cost at $1.08/w, in comparison to Chinese manufacturers $0.80 to 0.90/w costs, and Western manufacturers $0.95 costs.
They believe the U.S. manufacturer does have the chance to be competitive with its Western peers though, through a "differentiated offering". "[SunPower] targets a significant cost reduction for 2012 to $1.25/w efficiency adjusted to $0.86. The company has one line that has reduced cell process costs by 15 percent. These updated lines will represent 40 percent of all SPWR lines by year end 2011. The company is launching its Gen-3 24 percent efficient cells, well above current commercial leaders while Gen-2 20 percent efficient modules are already in production," explains Jefferies.
The figures
Having missed both Jefferies estimate of $734.3 million, and its own guidance range of $575 million to $625 million, Q4 2011 GAAP revenue fell sharply from $705.4 million in Q3 2011, and $937.1 million in Q4 2010, to hit $563.4 million. However, on a positive note, the company achieved record revenues of $2.3 billion for FY 2011, up from 2.2 billion in FY 2010.
Both GAAP and non-GAAP gross margin took a tumble for Q4 2011 and the FY, however. In the last quarter, SunPower achieved a GAAP gross margin of 7.9 percent (non-GAAP: 12.4 percent), down from 10.8 percent in Q3 2011 (non-GAAP: 11.4 percent), and 25.4 percent in Q4 2010 (non-GAAP: 26.6 percent). For the FY 2011, the company achieved a GAAP gross margin of 9.9 percent (non-GAAP: 13.6 percent), again down from a healthier 23 percent in FY 2010 (non-GAAP: 24.8 percent).
At $-83.1 million in Q4 2011, GAAP net income did improve on Q3 2011 ($-370.8 million), but fell significantly short of Q4 2010, which reaped a positive $152.3 million. For the FY 2011, the company saw $-603.9 million, compared to $178.7 million in FY 2010.
In terms of megawatts (MW) produced across the year, SunPower also excelled over previous years. It says it shipped 261 MW in Q4 2011, versus 272 MW in Q3 2011, and 159 MW in Q4 2010, and 922 MW for FY 2011, versus 584 MW in FY 2010.
2012
With Total having bought a 66 percent stake in SunPower, the company believes it is well-positioned in the solar market. Commenting, president and CEO, Tom Werner, says, "With Tenesol, SunPower is better positioned to drive market share growth and new market penetration."
For Q12012, the company forecasts non-GAAP revenue of between $500 million and $575 million (GAAP: $420 million to $495 million); a gross margin of between nine and 11 percent; capital expenditures of between $45 million and $55 million; and MW recognized in the range of between 190 to 210 MW.
Jefferies comments that GAAP revenue sits below its prior estimate of $774.9 million and consensus of $610 million. MWs recognized is also said to be lower than expected (280 MW), as is gross margin (13 percent).
For the fiscal year 2012, SunPower expects to reap both GAAP and non-GAAP revenue of between $2.6 billion and $3 billion, and MW recognized to be in the range of 900 MW to 1.2 gigawatts. "SunPower remains committed to achieving break even or better non-GAAP profitability and a year-end unrestricted cash balance of more than $300 million, while investing in cost reduction initiatives," it says in a stament released.
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