SunPower reports operational successes but posts a loss in Q1

SunPower released results for the first quarter of 2016 today, reporting a 13% decline in revenues under GAAP rules, and a net loss of $85 million. The company has noted that real estate accounting rules affect the timing of its recognition of some revenues, and reported a “non-GAAP” revenues of $434 million, but still a loss of $41 million.

Under either set of accounting rules the company reports a loss on a per-share basis, $0.62 per diluted share under GAAP and $0.30 in non-GAAP. SunPower emphasizes EBITDA as a better measure, and here the company reports a figure of positive $6.3 million. However, even this number is a 90% fall from what the company reported a year ago.

But while these numbers are less than ideal, SunPower is reporting very strong operational results. The company reports that its factories ran at full capacity during the quarter, although some of its went to inventory to meet expected demand during the second quarter. Additionally, company’s Fab 4 in the Philippines has begun to ship cells.

During Q1 SunPower also began shipping its Performance (P) Series PV modules. While the company says that these are higher efficiency than most multicrystalline silicon offerings, they are a lower cost and a substantial departure in design from the company’s high-efficiency back-contact PV.

SunPower says that these P-Series modules are intended primarily for markets in the developing world, but did complete a PV plant using P-Series modules for Tucson Electric Power in Arizona.

“With scale, we expect that our P-series will compete on price with our Asian peers,” stated SunPower CEO Tom Werner on the company’s results call. It remains to be seen when this scale will arrive, and the company expects an annualized capacity of only 60-80 MW of P-Series modules by the end of 2016.

On the downstream side, SunPower emphasizes its growth in the U.S. market, stating that residential revenues are up 50% year-over-year. In its lease business alone the company reports installations of 24.2 MW, but these were only around a third of the total as SunPower also sells PV systems on a loan and cash basis.

During the quarter SunPower rolled out two modular solutions: the Equinox solution for the residential market and the Helix for commercial installations. The Equinox features integrated microinverters, and SunPower cites a number of advantages for its modular solutions, including faster installation time, fewer components, and higher yields.

SunPower says that 40% of all new orders in the residential sector are for its Equinox product. These two solutions follow on SunPower’s Oasis Power Block, its modular solution for the utility-scale market which the company rolled out five years ago.

“We believe that these kinds of standardized solutions will become increasingly important as we move to the mainstream adoption of solar power,” declared SunPower CEO Tom Werner on the company’s results call.

In its utility-scale business SunPower also reports strong progress. During Q1 SunPower began construction of over 300 MW of projects, including a 100 MW PV plant for NV Energy and the 102 MW Henrietta PV plant. Additionally the company completed its 50 MW Hooper PV project, which is owned by yieldco 8point3 Energy Partners.

The company also began work on a 27 MW PV project in Japan; however SunPower’s best news comes from Latin America. In Mexico’s first electricity auction following its energy reform, SunPower walked away with contracts for around 500 MW of projects, roughly 25% of the volume of solar PV awarded.

This is SunPower’s biggest win in an international solicitation to date. The company plans to complete these projects in 2018 and 2019, using its P-Series modules in Oasis Power Blocks. Additionally, by the end of the year SunPower plans to begin construction on a 100 MW PV plant in Chile.

While dropping down a number of projects to 8point3 Energy Partners, the yieldco it shares with First Solar, SunPower also plans to hold a number of projects in its “holdco”. Currently holdco assets are mostly residential, however a significant capacity of utility-scale PV under construction is destined for the holdco.

During Q2 SunPower expects to deploy another 75 to 85 MW, with another 60-70 MW in commercial and 220-230 MW of utility-scale, for a total of 360-385 MW deployed. However it expects to only recognize revenues on 155-180 MW.

The company expects Q2 GAAP revenues of $290-340 million, with a net loss of $65-$90 million. Even the SunPower’s Q2 EBITDA comes out very narrow at $0-$25 million, however the company expects all of these metrics to come out positive and to report profit on a GAAP basis over the course of 2016.