SunPower reports strong Q3 despite lower revenues, net loss


For any solar project developer that builds utility-scale projects, quarter-to-quarter financial results can be misleading. This is largely due to the uneven pace of completion for large projects and the rules regarding recognition of revenue.

This is even more true for a company like SunPower that is transitioning to a model of holding assets instead of selling them, as this decreases quarterly revenues and margins while establishing long-term value for shareholders.

This may explain why analysts on Sunpower's Q3 2015 earnings call tended to congratulate the company on a strong quarter, despite a steep year-over-year fall in GAAP revenues to US$380 million, and a net loss of $56 million.

Operational results tell a different story. During the quarter Sunpower completed construction on its 135 MW-DC Quinto solar project and closed financing on the 128 MW-DC Henrietta project. Even in future quarters there is unlikely to be a significant boost in revenues from these two, as Quinto is destined for Sunpower and First Solar's joint yieldco, 8point3 Energy Partners, which also holds the right of first offer for Henrietta.

When these two, the 58 MW Hooper Project, and commercial and residential projects are added, Sunpower has over 1 GW of projects under contract which are available for 8point3.

Sunpower's residential and commercial businesses saw even better progress during the quarter. The company deployed 90 MW of residential PV during Q3, with 67 MW recognized as revenue and another 23 MW deployed through the company's leasing service.

SunPower reports a more than 50% year-over-year increase in megawatts booked and installed through its lease service. It also says that it has deployed over 1,000 storage solution contracts to date.

Additionally Sunpower recognized revenue on 66 MW of commercial projects, by far its highest volume to date. This news comes the same week that SunPower introduced a new kit for the commercial market. The Helix Platform features dual-tilt racking, factory installed connectors, a cable management system and monitoring software.

On the manufacturing end Sunpower also had a strong quarter. The company produced 361 MW of cells, and says that its Fab 4 plant in the Philippines is progressing on schedule for volume production in 2016, which will add 250 MW of annual capacity to the 1.4 GW that the company already has online.

The result of these successes is that Sunpower has increased its guidance for the full year 2015, and now expects $1.5-1.55 billion in revenue, and to deploy 1.15-1.18 GW of PV.

SunPower CEO Tom Werner says that the company is well positioned given its strength in the residential and commercial segments, despite both the pending drop-down of the investment tax credit in 2017 and the ongoing lull in the company's stock price and most solar stocks.

Werner notes that he has seen these sorts of fluctuations in the stock market before, which do not always reflect fundamentals. “If there was a lesson learned, or what worked, it is to stay the course,” says Werner.

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