Restructuring Leads To Slow Quarter For SunPower, But It Is Trending Profitable

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Silicon Valley solar manufacturer SunPower announced a first quarter net loss of nearly $90 million earlier this month amid restructuring costs and an operating loss of $117 million, but the company looks to be trending towards profitability as it focuses on distributed solar and storage.

Image Credit: SunPower

SunPower reported revenue for the first quarter of $411.6 million (non-GAAP, $348.2 million GAAP), down by 21% on the previous quarter’s $525.4 million and up slightly on the same quarter a year earlier. However, the company continued to report a net loss, with a first quarter loss of $57.4 million (non-GAAP, $89.7 million GAAP), deepening the fourth-quarter net loss of $30.3 million and the $28.2 million net loss reported in the first quarter of 2018. Net loss per share equated to $0.41 per share, missing earnings expectations even as it beat on revenue.

For the first quarter, SunPower deployed an impressive 455 megawatts (MW), up on both the previous and year-earlier quarters.

“We executed well as we met or exceeded our key financial guidance metrics for the first quarter while laying the foundation for improved profitability in the second half of the year,” said Tom Werner, SunPower CEO and chairman of the board.

The company has been posting a net loss for a while, now, but some believe the signs are pointing towards a profitable future. The company reported a first-quarter operating loss of $117.6 million, but that’s well down on the $156.8 million operating loss in the fourth quarter of 2018 and even down on the first-quarter 2018 operating loss of $134 million. As the company continues to restructure — which has included layoffs, selling off its yieldco 8point3, stepping out of the utility-scale development market, and selling off its microinverter line — it is now focusing on becoming, as Tom Werner said to Greentech Media, “an energy service provider, based on the world’s best solar systems.”

With so much weight left behind, SunPower has been able to focus on its future goals, and earlier this year it began producing its new 19% efficient P-19 shingled crystalline silicon module at its Hillsboro, Oregon factory — a factory which it acquired from the beleaguered SolarWorld Americas in April 2018. A month later the company announced the launch of its highly-anticipated Next Generation Technology solar panels which are the industry’s first-ever 400-plus-watt and the world’s most powerful residential solar panels.

Image Credit: SunPower

Unsurprisingly, given the stats, demand for both products have been strong. The P-Series module is already fully booked out through the end of 2019 while all of SunPower’s products are sold out through to the end of the second quarter — even as those same lines are running at 100% capacity utilization.

“Demand in our global DG business remains strong and we expanded shipments into the international power plant market,” said SunPower’s Tom Werner.

“In the first quarter, we introduced exciting new products in both the upstream and downstream parts of the value chain. Upstream, we introduced a new portfolio of residential Maxeon and P-Series panels for both U.S. and international residential markets and we are already seeing significant demand for these new products in our global DG business. We also began shipment of P-Series panels from our Oregon factory and the ramp of our 25 percent efficient Maxeon Gen 5 cell technology in Fab 3 is continuing. In our downstream business we unveiled a revolutionary online, instant design platform for our North American residential market that will improve customer experience while reducing costs.” – Werner

“SunPower broadly matched market expectations in 1Q, securing a low non-GAAP 6% gross margin, slightly ahead of the guidance range, yet 2Q’s 7-10% goal appears slightly lighter than we anticipated,” added James Evans of Bloomberg Intelligence who provided his analysis upon request. “Margin may nevertheless strengthen over 2019, we believe, particularly in 4Q, as a rising volume of SunPower’s lower-cost NGT panels are deployed via its new A-Series offering to US residential customers. Strong US demand means production utilization is running at 100%, with customers seeking qualification for higher investment tax credit (ITC) rates in 2019, with SunPower safe-harboring some equipment for the ITC that could amount to 400 megawatts of new demand.

“An acceleration of profitability and cash generation could emerge over 2019, helping to stabilize the company’s cash position,” Evans predicted, though the reality is SunPower has to meet the expectation surrounding its future.

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Joshua S Hill

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