SunPower Returns To Profitability In Q2/2019

SunPower Reports Profitability In Q2/2019 With $121.5 Million Net Income; Management Guides For Up To $120 Million Adjusted EBITDA & $200 Million Cash To Exit 2019
10:53 AM (Beijing Time) - 05. August 2019
sunpower q2 2019

Bolstered by its return to profitability and the business doing well, SunPower is confident of achieving positive cash flow in 2019. It has provided an upward revision to its adjusted EBITDA guidance of $100 million to $120 million, increasing from the previous guidance of $90 million to $110 million. (Source: SunPower Corporation)

Key Takeaways

  • After reporting net loss of $447.1 million in Q2/2018, SunPower has struck back into business with a profitability of $121.5 million
  • While SPES business benefited sequentially with improved demand from residential and commercial segments, SPT division reported more than 30% higher revenues YoY
  • Company continues its search for a funding partner for its NGT expansion as it hopes to start production on a second Maxeon 5 manufacturing line in Q3/2019
  • One important topic during the conference call with analysts was SunPower management highlighting that the transitioning beyond just a solar company to an energy services platform
  • For 2019, SunPower has guided for adjusted EBITDA of $100 million to $120 million and targets to exit 2019 with a cash balance of over $200 million

SunPower Corporation has reported its financial results for Q2/2019 reflecting GAAP net income of $121.5 million, which is huge when taking into account that its net loss a year back was $447.1 million (see SunPower Sales & Losses Up In Q2). Its SunPower Technologies (SPT) business reported $314.9 million in revenues, an increase of over 30% over previous year’s contribution, even as SunPower Energy Services (SPES) division’s revenues declined over 6% from the same time. The SPES division saw its sequential revenues going up with improved demand from the residential and commercial segments.

Shipment in the SPT segment reached a total of 637 MW, which exceeded the forecast and was driven mainly by the international DG business.

SunPower’s SPES business caters to North American residential and commercial businesses, while SPT refers to manufacturing, international DS/power plant panel businesses.

The GAAP gross margin of 4.5% was positive compared to a negative GM of 69% a year back. Adjusted EBITDA was $8 million after a negative EBITDA of $23.8 million in the previous quarter.

Operationally, the ramp of our industry leading Maxeon 5 cell and panel technology continues and we expect to start production on a second Maxeon 5 manufacturing line this quarter,” CEO Tom Werner said while providing an update on the company’s technology plans. “Finally, we are seeing strong traction for our Performance Series product with increasing volume from both our Oregon and DZS factories.”

For its next generation technology (NGT), the company is still looking for a funding partner which once in will will have SunPower ‘ramp subsequently and more aggressively next year…converting more lines to Maxeon 5’ (see Production Expansion On SunPower’s Mind In 2019).

One important topic during the conference call with analysts was SunPower management highlighting that the transitioning beyond just a solar company to an energy services platform enables them to extract more value, particularly as the storage attach rate goes up, according to investment bank Cowen.

Guidance

In Q3/2019, SunPower aims to report revenues of $430 million to $470 million with GAAP gross margin of 8% to 12% and net loss of $55 million to $35 million. It hopes to deploy 550 MW to 600 MW in total during the next quarter.

The management has guided for total 2019 GAAP revenues to come in between $1.8 billion to $2.0 billion with adjusted EBITDA of $100 million to $120 million. Previously, the guidance for adjusted EBITDA was lower – between $90 million to $110 million.

Capital expenditures during the period are likely to be around $65 million and net loss of $20 million to $0 million. Overall, the total capacity deployment target for the US company in 2019 is in the range of 2.05 GW to 2.25 GW.

The company wants to exit 2019 with a cash balance of over $200 million.

The Cowen research analysts liked what they heard from SunPower in Q2, which they summarised in a research note. “Given the strong 2Q performance across all platforms, market share gains, and industry growth, management raised FY19 guide after and expects to end the year at over $200mn in cash. NGT ramp is proceeding well but securing a funding partner remains key. We see the transition to an energy services company bolstering confidence as it drives both ASPs/ MW and margin expansion.”

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani