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Continuous Strong Demand Leads to SunPower's Outstanding Financial Performance in 1Q14

published: 2014-04-25 15:35

"SunPower once again posted strong quarterly results, reflecting the power of our full value chain integration and diversified market footprint. We benefitted from strong demand in our distributed generation channels as well as solid execution in our global power plant business," said Tom Werner, SunPower president and CEO. "Construction of our new 350-megawatt (MW) solar cell manufacturing facility (Fab 4) is on track with first silicon expected early next year. This new capacity will allow us to address the growing demand for our high efficiency solar systems and will incorporate technology that further advances SunPower's performance advantage. A pre-production solar cell incorporating Fab 4 technology was recently measured at more than 25 percent efficiency by the National Renewable Energy Laboratory.

"Regionally, our North America business continued to perform well. The 579-MWac Solar Star projects for MidAmerican Solar remain on schedule with more than 170-MW grid connected. We also started construction of a 20-MWac SunPower® C7 Tracker (C7) power plant, with project completion expected early next year. We ended the quarter with very strong bookings in our commercial business as corporate and public sector customers continued to demonstrate their preference for SunPower's high efficiency solutions. We also posted another solid quarter in our residential business, where we offer the industry's best technology at a competitive price along with a flexible array of financing options to meet the needs of all customers. With the recent closing of innovative lease financing facilities with Google and Hannon Armstrong, we continue to grow our residential offerings while improving cash flow.

"Our EMEA business also performed well as we exceeded our revenue and margin goals for the quarter. In Europe, demand remained strong and we benefitted from an improving pricing environment. We also expanded our footprint in France, where 44-MW of recently-awarded French tender projects specified SunPower's technology. We continue to meet or exceed our power plant project commitments in EMEA, grid connecting the first phase of a 22-MW project in South Africa approximately five months ahead of schedule. With a strong backlog and favorable pricing trends, we remain bullish on our opportunities in this region.

"We posted another solid quarter in Asia Pacific as pricing remained strong and demand for our distributed generation and power plant solutions in Japan significantly exceeded our supply. In China, our C7 manufacturing joint venture achieved a number of key milestones during the quarter, including our first cell package order totaling more than 70-MW. We will continue to scale-up production of this power plant technology for the China market and expect additional orders this year.

"Solar is now competitive with traditional generation in many markets. We are well-positioned to lead future industry growth because of our unique strategy, differentiated products, 7.5 gigawatt (GW) global pipeline and a decade of experience in both distributed generation and power plant applications," concluded Werner.

"We again exceeded our revenue and profit goals for the quarter as we benefitted from strong execution in all of our key markets," said Chuck Boynton, SunPower CFO. "Additionally, we strengthened our balance sheet as we successfully managed our working capital and cash balances. We were also pleased with our two new financings during the quarter. Our $250 million Google tax equity partnership supports the profitable growth of our lease business over the long-term, while the Hannon Armstrong $42 million financing offers us a non-recourse debt structure that minimizes interest rate risk, maximizes the value of our existing lease assets and proves the high quality of our lease portfolio."

First-quarter fiscal 2014 non-GAAP results include net adjustments that increase net income by $10.3 million, including a ($16.6) million gross margin adjustment related to the timing of revenue recognition from utility and power plant projects, $14.9 million in stock-based compensation expense, $5.2 million in non-cash interest expense, ($0.4) million of other adjustments and $7.3 million in tax effect.


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