SunPower, one of the United States’ leading non-residential solar installers, has dropped a massive bombshell as it revealed a massive reduction in its 2016 guidance and announced a 15% cut to its workforce, resulting in 1,200 jobs being shunted out the front door.
According to SunPower president and CEO Tom Werner, the company’s “second quarter execution was solid.” Revenue for the quarter was up, coming in at $420 million — up 9% on the previous quarter, and up 10% on the same quarter a year earlier. The company also reported that with “a record pipeline of more than $1.3 billion, strong bookings, currently stable pricing and the continued successful ramp of our Helix solution, we are well positioned to gain share in the commercial market.”
Earlier this year, SunPower was listed as the second leading non-residential solar installer in 2015, according to figures published by GTM Research. It was unsurprising news, considering the impressive Q4’15 and full year-2015 figures the company reported in February, which resulted in an immediate 12% jump to the company’s share price.
However, despite an impressive 2015 and a “strong” Q2’16, that’s where the good news finishes for SunPower.
The company reported a net loss of $70 million in the quarter, or $0.51 per diluted share. While favorable compared to the $85.4 million/$0.62 net loss/loss per share reported in the first quarter, it was a different story a year earlier with a net income of $6.5 million and $0.4 per share.
“However, while the long-term fundamentals for solar power remain strong, we see a number of near-term industry challenges, primarily in our power plant segment, that we expect to impact our business and financial performance in the second half of 2016,” Tom Werner continued, in an ominous prelude of the massive restructuring the company is set to go through, which included “proactively” deciding to streamline the company’s “power plant development segment while shifting investment to our distributed generation (DG) segments.” The company is also “realigning” its manufacturing operations and closing the Philippine panel assembly facility, transferring the equipment to its “lower cost facilities in Mexico.”
SunPower is therefore reducing its workforce by approximately 15%, or around 1,200 employees — primarily centered around the closure of its Philippine facility. The restructuring costs are expected to total in the range of $30 to $45 million, with a substantial segment of this expected to be incurred in the third quarter.
As a result, then, SunPower shredded its previous guidance for 2016. In its Q4’15 and Full Year-2015 announcement back in February, SunPower predicted revenue for 2016 in the range of $3.2 billion to $3.4 billion, and deployment of between 1.7 GW and 2 GW.
This has been updated down to an expected revenue in the range of $3.0 billion to $3.2 billion, and deployment in the range of 1.45 GW to 1.65 GW.
The news hit the company’s shares hard, dropping from $14.78 to $10.41 before trading even opened, a drop of nearly 30% — and with the day nearly over (as I write), the company’s shares haven’t stabilized, hovering around $10.40.
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