SunPower (SPWR) Q2 Loss Wider Than Expected, Offers View

SunPower Corp. (NASDAQ:SPWR) reported second-quarter 2016 adjusted loss of 33 cents per share, wider than the Zacks Consensus Estimate of a loss of 31 cents by 6.5%. In the year-ago quarter, the company had reported earnings of 9 cents.

Adjustments were related to the sale of projects to 8point3 Energy Partners (NASDAQ:CAFD) – a holding company formed in 2015 with First Solar (NASDAQ:FSLR) , sale of operating lease assets, revenues from utility and power plant projects, stock-based compensation, sale-leaseback transactions, tax effect, and other adjustment costs.

On a GAAP basis, the company incurred a loss of 51 cents per share. In the year-ago quarter, it had reported earnings of 4 cents.

Operational Results

During the quarter, SunPower generated revenues of $401.8 million, surpassing the Zacks Consensus Estimate of $341 million by 17.8%. Reported revenues also grew 6.7% from the year-ago figure of $376.7 million.

The company’s gross margin contracted 450 basis points (bps) to 13.1% from 17.6% in the prior-year quarter. Total operating expenses were up 11.9% to $116.2 million owing to higher research and development expenses (52.8%), and selling, general and administrative expenses (3.9%).

Financial Position

SunPower had cash and cash equivalents of $590.1 million, as of Jul 3, 2016, compared with $954.5 million as of Jan 3, 2016. Long-term debt increased to $578.2 million from $478.9 million at 2015 end.

In the second quarter, net cash outflow was $300.1 million from operating activities, compared to outflow of $212.0 million in the year-ago period.

Guidance

On a non-GAAP basis, the company expects revenues in the range of $750–$850 million for the third quarter of 2016 and $3.0–$3.2 billion for the full year. Gross margin is estimated to be 16.5–18.5% for the third quarter and 10.5–12.5% for the full year.

SunPower expects to deploy 380–420 megawatts (“MW”) in the third quarter and 1,450–1,650 MW in 2016.

A Peer Release

SolarCity Corp. (NASDAQ:SCTY) , the largest U.S. rooftop solar installer, posted an adjusted loss of $2.32 per share in the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of $2.43. However, the quarterly figure was much wider than the year-ago loss of $1.61 per share. The wider loss can be attributed to the company’s rising expenses.

Zacks Rank

Currently, SunPower has a Zacks Rank #4 (Sell).

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