SunEdison suffers Q2 loss but sees growth in solar project pipeline

Solar power plants operator SunEdison, formerly known as MEMC Electronics Materials, Inc., saw its solar project pipeline grow to 2.9 GW and backlog to 1 GW.

The semiconductor wafer segment is in a downturn according to company CEO Ahmad Chatila, but the Q2 performance of solar materials has improved. "Solar Energy posted sequentially higher non-GAAP sales, pipeline and backlog, and remains well positioned to capture a disproportionate share of the solar market going forward," Chatila added.

Nevertheless, the company suffered a Q2 net loss of $102.9 million, up from a $77.2 million net loss a year ago.

The Generally accepted accounting principles (GAAP) revenue in Q2 2013 was US$401.3 million with a GAAP EPS (earnings per share) of $0.45. The non-GAAP revenue was US$491.6 million with a non-GAAP EPS of $0.19. The solar energy recognized non-GAAP revenue related to 51MW of solar energy systems, interconnected 22MW and ended the quarter with 200MW under construction.

Solar segment GAAP

The GAAP revenue of the solar segment fell year-over-year. Lower volume and pricing for solar projects and materials have been pinpointed as the decrease seen in year-over-year and sequential GAAP operating income. SunEdison stated that during the Q2 2013, all of the projects recognized for GAAP revenue were EPC-only projects, for which pricing per watt is generally lower than fully developed solar system projects per watt because the company is not involved in every phase of the solar project design, financing and development.

The GAAP revenue was also lower due to lower solar project sales which were only partially offset by higher solar materials sales. Q1 2013 included $25 million revenue from the ammendment of a supply contract with Tainergy. Q2 2013 and Q1 2013 GAAP revenue included $11.7 million and $8.2 million, respectively, of previously deferred revenue related to the sale of projects in prior quarters for which the same amounts were recognized in non-GAAP revenue in the corresponding prior periods. In Q2 2013, the solar segment recognized GAAP revenue from solar projects totalled 14 MW, compared to 47 MW in the 2013 first quarter and 144 MW in the 2012 second quarter.

Solar segment non-GAAP

Non-GAAP revenue was also down year-over-year. Lower solar project volume and pricing were again said to be the reasons. The sequential decline in operating income was driven primarily by losses generated from solar wafer sales. In the same quarter in 2012 98MW of projects were sold. These were originally expected to term out in December 2011 but were delayed due to adverse market conditions in Europe. The decrease reflected the company’s decision to slow development spending in 2012.

Non-GAAP revenue was higher sequentially due to higher solar project volume and prices, and higher sales of solar materials products. Non-GAAP revenue was recognized from 51MW of solar project sales in Q2 2013, compared to 45MW in Q1 2013 and 169MW in Q2 2012. Of the 51MW that were recognized for non-GAAP revenue in Q2 2013, 44MW were direct sales and 7MW were sale-leaseback transactions.

Pipeline, backlog and construction

Solar projects interconnected in Q2 2013 totalled 22MW from 17 projects. 15MW were direct sales projects and 6MW were sale-leaseback projects. As of end of June, 200MW of pipeline was under construction, which includes projects with pipeline and backlog in various development stages.

Chatila also spoke about the pipeline and backlog growth in a conference call yesterday, "Projects under construction increased in Q2, and we added significantly more at the outset of Q3. During the second quarter, we grew our project pipeline by more than 200MW to 2.9 GW, and grew our backlog by more than 100 MW to 1 GW. We continue to have a robust growth engine and maintain good diversity in our pipeline, both in terms of geography and project size."

Outlook

With the assumption that there will be no global economic or other significant shocks to come, SunEdison sees their total non-GAAP solar energy systems sales volumein Q3 2012 in the range between 60 and 100 MW. On the balance sheet the solar energy systems MW is exptected to remain between 0 and 10 MW for Q3. The company also foresees a fully developed solar energy systems average project pricing between $3.25/watt and $3.50/watt and capital spending between $30 and $40 million.

For the full year 2013, the company foresees the following for the solar segment:

  • Solar energy systems total non-GAAP sales volume in the range of 430 MW to 500 MW
  • Solar energy systems MW retained on the balance sheet between 50 MW and 100 MW
  • Total solar energy systems average project pricing between $3.10/watt and $3.40/watt
  • Capital spending between $120 million and $140 million