SunPower Squirms After Topsy-Turvy Third Quarter
US-based solar PV manufacturer SunPower announced its financial results for the third quarter last week, in which it revealed better-than-expected earnings but weaker-than-expected revenues for a quarter that performed as a current snapshot of the combined challenges and successes of the solar industry.
SunPower reported non-GAAP loss per share of $0.29, beating market expectations by $0.11, and GAAP loss per share of $0.64, beating market expectations by $0.28. The company also reported revenues of $443.4 million for the quarter, down 16.9% year-over-year and missing market expectations by $42.59 million. Gross margin crept back into the green with 2.3%, compared to -69.1% in the previous quarter and 4.4% a year ago.
“In the third quarter we achieved our Adjusted EBITDA target, continued to execute on our strategic initiatives, received our section 201 technology exclusion and positioned the company for sustained profitability,” said Tom Werner, SunPower CEO and chairman of the board.
SunPower also revealed that it intends to sell further assets and increase its loans in 2019 in an effort to avoid bankruptcy due to what some are describing as “looming liquidity issues” as the company currently expects to remain in the red next year.
In the same quarter as it struggled to crawl back towards the black, SunPower nevertheless was able to close the acquisition of assets belonging to SolarWorld Americas, including its Hillsboro, Oregon, facilities and its workforce of more than 200 employees which effectively restarts SunPower’s ability to begin manufacturing in the United States. Additionally, and specifically pertaining to its business in the US, the company also received Section 201 tariff exemption for its interdigitated back contact (IBC) cell and module technology.
SunPower also increased its distributed generation volume by approximately 15%. “Demand in our global DG business remained strong with sequential and year-over-year volume growth,” explained Tom Werner. “In particular, our U.S. residential business exceeded our forecasts while our commercial business booked a number of large scale, multi-site enterprise deals with customers including Walmart. We also saw strong bookings in our SunPower Solutions group though our third quarter financial performance was affected by certain international project delays which led to lower-than-expected Performance Series (P-Series) panel shipments and revenue for that group in the quarter.”
In the days following SunPower’s financial earnings the company’s shares have jumped up and down, plunging 11% immediately off the back of the news before climbing back to where it began a few days later before again working their way down again, now sitting 5% below where they finished on the 30th.
One thing affecting confidence in the company’s shares is its fourth quarter and full-year guidance, which predicts revenues below market consensus. Specifically, SunPower guided non-GAAP guidance of revenue between $510 million to $610 million for the fourth quarter, with a gross margin of between 6% to 8%, adjusted EBITDA of between $0 million to $20 million, and a total of between 425 MW to 475 MW worth of deployments.
For the full-year, SunPower expects non-GAAP revenue of between $1.8 billion to $1.9 billion, narrowed from between $1.6 billion to $2 billion and below analyst consensus of $1.98 billion. The company expects to deploy between 1.45 GW to 1.55 GW due to project delays in the company’s SunPower Solution business.
“SunPower’s interdigitated back contact (IBC) modules won exemption from the U.S. tariffs announced in February on all foreign PV modules (referred as Section 201),” explained Xiaoting Wang, a Solar Insight analyst at Bloomberg New Energy Finance. “SunPower’s IBC modules have efficiency up to 21.5%, generating 17% more power from the same area than normal monocrystalline silicon products from most Chinese firms. As the production cost of IBC modules is 2-3 times that of normal monocrystalline silicon modules, they can only be sold to residential and small-scale PV projects, where higher module efficiency is more appreciated. The company is able to bring these into the US duty-free from its Philippines, Malaysia, France, or Mexico fabrication facilities.”
Whether this ends up helping SunPower in the long-run — despite the company’s plans to sell off assets already in place — remains to be seen.
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