Solid partnerships and full fab capacity mark strong fiscal year for SunPower


SunPower Corporation – a leading supplier and manufacturer of solar panels and systems –revealed yesterday that the company's fourth quarter and fiscal year 2013 performance outperformed projections at every juncture.

Company highlights for 2013 were SunPower's continued strong showing in North America, on-track development of two of its largest PV projects to date, a 20% reduction of annual operating costs, full fab capacity across the board and beneficial partnerships with Bank of America and French energy giants, Total.

"Solid execution enabled us to substantially beat our plan every quarter this year," said SunPower CEO and president, Tom Werner. "Demand remains strong in both our power plant and distributed generation businesses, and we are executing well in our manufacturing operations with all solar cell Fab facilities running at full capacity.

"Our technology and operations teams continue to drive down panel cost as we reduced our annual costs by more than 20% for the second year in a row. Additionally, our new 350 MW Fab remains on track and we expect first silicon production in less than 12 months’ time."

In a conference call for investors, Werner expanded further on this point: "We believe that SunPower’s ability to directly attack cost across the entire value chain represents an important source of long-term competitive advantage. With respect to capacity expansion, fab 4 remains on track to produce silicon at a cost per watt that is 35% lower than our fab 2.

"Additionally, we will leverage our strong research and development efforts and step reduction programs in fab 4 that will enable us to drive higher cell efficiencies with the plan to produce our first 23% X-Series panel by the end of 2015. In the meantime, we are continuing to ramp our X-Series production at our existing facilities as global demand significantly exceeds capacity. With our next generation fab under construction and continued cell efficiency improvement, we continue to extent our technology leadership in the industry."

Strength in the US

Werner also revealed in the report SunPower's strength in the U.S. market, citing the 579 MW Solar star projects for MidAmerican Solar in which the company is involved, reaching a key milestone in the fourth quarter of 2013 by connecting the first 57 MW to the grid.

The headline breakthrough, however, was achieving full commercial operation of the 250 MW California Valley Solar Ranch, which is one of the world's largest PV installations. Furthermore, a booking for a 20 MW SunPower C7 Tracker project displayed the company’s versatility across the PV sector.

"We are also seeing strong momentum in our North American residential business,” revealed Werner, "with more than 20,500 leasing customers signed to date." SunPower’s foray into the solar leasing market is the fruit of a $220 million collaboration with Bank of America, and will continue to be a strong focus market in 2014. So far, 48 MW of solar PV capacity has been added across the U.S. residential and light commercial sector on the back of this scheme.

International growth

In Europe, a strong rebound in SunPower's rooftop business ensured the company was able to achieve end-of-year profitability in the EMEA (Europe, Middle East and Africa) region, with revenues boosted by the sale of one of SunPower's power plants.

The Asia Pacific region also proved a happy hunting ground for SunPower, with Japan alone accounting for 24% of total company shipments – a near 100% increase in volume in the space of one year. An agreement to provide 20 MW of solar systems across seven sites for Ecomax Japan Inc. helped swell SunPower's Japan portfolio to 110 MW of installed or planned PV capacity – the majority of which lies in the country’s lucrative residential market.

Elsewhere, said Werner, SunPower's partnership with Total has opened up new global markets, not least in Chile where final financing was secured for a 70 MW merchant power plant. In South Africa, SunPower was awarded the contract to build a 86 MW PV plant, while the C7 tracker venture in China and a determined focus on the Middle East takes SunPower’s global PV pipeline to 6 GW.

The financials

For the fourth and final quarter of 2013, SunPower generated GAAP (Generally accepted accounting principles) revenue of $638 million, which was slightly down on both the third quarter ($657.1 million), and Q4 2012 ($678.5 million). However, the company’s gross margin for the fourth quarter was 20.5%, well above the 6.9% posted for the fourth quarter of 2012.

For the fiscal year, revenues stood at $2.5 billion (up from $2.41 billion in 2012), with a gross margin of 19.6% (10.2% in 2012).

"SunPower delivered another strong quarter across all business segments as we exceeded our revenue and profit targets for the quarter and the year," said SunPower CFO, Chuck Boynton. "Additionally, we strengthened our balance sheet while generating approximately $270 million in free cash flow in 2013 by prudently managing our working capital.

"We were also pleased to extend our relationship with Bank of America as their scalable, proven platform will help us drive continued growth in our residential lease channel. With the further monetization of our significant project pipeline, continued focus on expanding our global footprint and ability to optimize our cost and capital structure, we are well positioned to meet our goals for 2014."

Looking ahead, SunPower expects to generate non-GAAP revenues of between $2.4 billion and $2.6 billion for 2014, with a gross margin somewhere between 18% and 20%.

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