Falling revenues, growing yieldco at SunPower Q2

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Falling revenues augur badly for a solar manufacturer and project developer, however for SunPower, which has reported its Q2 2015 results, it is more indicative of a company in transition. On the manufacturing front, SunPower remains fully booked as it supplies a number of key distributed generation markets and builds out a portfolio of PV power plant projects in the U.S., Africa, Japan, France and Chile.

SunPower’s revenues for Q2 came in at US$381 million, down from $440.9 million Q/Q and $507.9 Y/Y. Despite the falling revenues, the result surpassed market expectations.

In joint venture with First Solar, SunPower launched its 8point3 Energy Partners yieldco in the quarter, with the company purchasing SunPower’s 135 MW Quinto solar project, which is set to be completed in Q4. Other power plant project highlights included the grid connection of the staggeringly large 579 MW Solar Star project, which is owned jointly by Berkshire Hathaway Energy and Southern California Edison.

By way of explanation, CFO Chuck Boynton said that revenues from project sales to 8point3 Energy Partners are reduced, as is reflected in the headline figures, through SunPower’s 41% stake in 8point3. The company expects the yieldco to deliver to it a reduced cost of capital.

The acquisition of Australian developer Infigen’s 1.5 GW U.S. pipeline was highlighted in the earnings call. The $38 million deal includes 35 projects at various stages of development, which are to be built out through to 2020.

SunPower continued to supply China, with its low concentrating C7 technology, however it reported slightly reduced activity in the country this quarter.

Distributed generation markets

The residential market remained important to SunPower in Q2. The high-efficiency producer reported a quarterly increase in bookings of more than 120% Y/Y, with Japan proving the key foreign market. SunPower released its X-Series module line, exclusively for the Japanese market today. The X-Series modules have an impressive 21.2% efficiency and employ the company’s Maxeon cell technology. SunPower expects to increase its output of the X-Series by 300% Y/Y.

The commercial rooftop market is less central to SunPower’s business, however CEO Tom Werner pointed to a 22 MW supply deal with Kern High School District and a 10 MW deal with retailer Macy’s.

A striking figure from the Q2 report is that SunPower forecasts that by the end of 2015 it will have supplied more than 500,000 distributed generation customers.

On the manufacturing front, while some competing module manufacturers have announced massive capacity adds SunPower remains more modest. It did, however, achieve output increases at its fully utilized Philippines and Malaysian fabs. CEO Werner reported that the new Fab 4 is being “run in the large scale” and will come online later this year. Werner said that output from the fab will have a “material impact” in 2016, and will turn out exclusively the high efficiency X-Series product – a next generation product for SunPower.

Forecasts

Looking forward, SunPower has issued Q3 expectations of revenues between $400 – $450 million, with a gross margin of 10% – 12%. Shipments should total 300 MW – 330 MW for the quarter. For the full year SunPower expects revenues between $2.4 – 2.6 billion, on shipments of between 1.25 GW – 1.3 GW.