SunPower Marks Q1 Loss Amid Restructuring to Focus on Distributed Solar and Storage

Solar manufacturer and developer SunPower reported continued
losses in the
first quarter of 2019
. The down quarter comes amid a
restructuring effort that’s shifted SunPower’s development
efforts away from utility-scale solar and toward distributed
residential and commercial solar opportunities, as well as energy
storage. 

SunPower’s first-quarter results included:

  • Non-GAAP revenue of $411.6 million, compared to of $525.4
    million in the fourth quarter and $399 million in the same quarter
    last year
  • Non-GAAP net loss of $57.4 million, or 42 cents per diluted
    share, more than double the $28.2 million net loss from the same
    quarter last year.
  • Non-GAAP revenues of $241.7 million for SunPower Energy
    Services, its North American residential and commercial business,
    compared to $255 million in the same quarter last year.
  • Non-GAAP revenues of $230.6 million for SunPower Technologies,
    its manufacturing and international business arm, compared to
    $252.4 million in the same quarter last year. 

Still, the company’s loss per share of 63 cents came in lower
than Wall Street analyst consensus estimate of 40 cents, while
first-quarter revenues exceeded analyst projections. SunPower
shares fell 20 cents, or 2.64 percent, to $7.38 on Thursday. Shared
fell an additional 17 cents, or 2.3 percent, in after-hours
trading.

But in a Tuesday afternoon interview, CEO Tom Werner noted that
SunPower’s restructuring efforts are bearing fruit. “Our financials
are improving markedly,” with second-quarter guidance projecting a
GAAP net income of break-even to $20 million, and full-year
guidance for $1.9 billion to $2 billion in revenues and 1.9 to 2.1
gigawatts of product shipped.

The driver for this improvement is the alignment between
SunPower’s upstream and downstream businesses, he said. On the
upstream side, SunPower is introducing new higher-efficiency solar
panels aimed at the needs of the residential and
commercial-industrial markets it’s now focused on. And “in the
downstream business, SunPower will become an energy service
provider, based on the world’s best solar systems,” said Werner,
with energy storage and software added on. 

Shedding utility-scale development, shifting to distributed
solar and storage 

SunPower began
exiting the utility-scale
 solar development business to focus
on residential and commercial and industrial projects in mid-2017,
and in September sold
its 4.7-gigawatt pipeline
 of utility-scale solar projects
across 16 states to Clearway Energy Group.

Last year also saw SunPower sell its joint venture YieldCo with
First Solar, 8point3,
at a discount to its market value. The company also sold off its
U.S. residential lease portfolio and
sold Enphase the microinverter business
it got from its 2014
acquisition of SolarBridge.

Werner framed the March 2019 sale
of 233 megawatts
 of commercial solar project leases to a
subsidiary of Goldman Sachs Renewable Power, which brought SunPower
$87 million, in similar terms. “We’ve talked for several years
now of selling non-core assets to generate cash so we can invest it
in the business and to simplify our P&L, and this is a step to
do that.”

Meanwhile, SunPower’s distributed development arms provide an
important end market for the company’s own solar
panels, Michelle Davis, a senior solar analyst at energy and
consulting firm Wood Mackenzie Power & Renewables, said. The
intense price competition for utility-scale solar projects,
meanwhile, has not been amenable to SunPower’s “premium
product” modules, which offer high efficiency and reliability but
at relatively higher prices. 

SunPower’s Next Generation Technology solar panels, which the
company says will perform similarly to its IBC modules but at a 40
percent cheaper price point, began initial production in the fourth
quarter of 2018.

A closer look at SunPower earnings

SunPower’s Residential business reported non-GAAP revenues of
$167 million and added about 9,000 customers in the first quarter,
despite weather-related slowdowns in key markets such as
California. SunPower now has about 275,000 residential customers,
and 35,000 new homes in its backlog, with a projection of
15-percent growth for 2019. The quarter also saw the release of
SunPower’s “instant design” digital interface, which uses
machine learning algorithms to reduce time to scope out a potential
customer’s suitability for solar to less than a minute, Werner
noted. 

The commercial business reported first-quarter revenues of $75
million with 25 megawatts deployed. It also added to the roster of
customers signed up for SunPower’s Helix storage system, which
has booked 38 megawatts of sales so far in California and Hawaii,
with 110 megawatts in pipeline, and an “attach rate” — the
ratio of commercial solar customers that end up adding storage —
of 35 percent. 

On the residential side, SunPower’s Equinox storage product
remains on plan for release in the second half of this year. While
SunPower now sells batteries alongside residential solar systems,
the uptake is currently between 5 and 10 percent, Werner
estimated.

“We expect that to increase dramatically as we release our own
offering,” he added.

SolarWorld acquisition, Section 201 tariff
exemptions

SunPower Technologies, SunPower’s manufacturing and
international projects arm, had a positive quarter. It produced 294
megawatts and shipped 455 megawatts in the first quarter, and saw
its international distributed generation (DG) business grow 30
percent from the same quarter last year to 190 megawatts
shipped.

SunPower, which made most of its panels in Mexico and
Asia, was hard hit by the solar tariffs imposed under the
Section 201 trade case brought by Suniva and SolarWorld Americas.
In January 2018, the Trump administration set a 30-percent
tariff
 for virtually all foreign-made solar panels. 

In response, last year SunPower acquired
SolarWorld Americas’
 U.S. assets, a deal that secured the
company a domestic manufacturing base. SolarWorld’s facility in
Hillsboro, Ore. started producing SunPower’s P-Series panels in the
first quarter, and is currently preparing its second manufacturing
line for its high-efficiency Maxeon solar panels, Werner
said. 

SunPower was also one of the only solar manufacturers
to win
an exemption
 from Section 201 tariffs for certain designs of
foreign-made panels, in a September decision from the U.S. Trade
Representative that appeared tailored for SunPower’s
technology.

Source: FS – GreenTech Media
SunPower Marks Q1 Loss Amid Restructuring to Focus on Distributed Solar and Storage