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SunEdison Inc. (SUNE - Analyst Report) reported first-quarter loss per share of 25 cents, wider than the Zacks Consensus Estimate of a loss of 15 cents. Moreover, the non-GAAP loss per share widened from the 16 cents loss reported in the year-ago quarter.

Quarter Details

Non-GAAP revenues (adjustments related to Solar Energy business from direct sales and Financing sale-leasebacks) increased 33.9% year over year to $577.6 million but fell short of the Zacks Consensus Estimate of $641.0 million. The year-over-year revenues were aided by higher solar project sales (up 86.8% year over year), which offset lower sales of semiconductor materials (down 11.3% year over year).

SunEdison’s non-GAAP gross margins were down from 9.7% reported in the year-ago quarter to 3.8%. The company’s non-GAAP operating loss of $103.6 million for the quarter significantly deteriorated from $41.4 million operating loss reported in the year-ago quarter. The year-over-year decline was attributed to higher operating expenses (up 50.6% year over year) and holding costs related to unsold projects.  

SunEdison reported non-GAAP net loss of $64.2 million or 25 cents per share compared with a loss of $35.5 million or 16 cents per share.

SunEdison exited the first quarter with cash, cash equivalents and restricted cash of $526.6 million compared with $643.6 million in the previous quarter. Long-term debt (excluding current portion) stood at $2.61 billion. The company used $215.2 million cash in operations.

Guidance

For the second quarter, SunEdison expects Solar energy system sales volume in the range of 60 to 80 megawatts (MWs) while it expects to complete 160 to 200 MWs Solar energy systems.  The company expects average project pricing to range between $2.85/watt and $3.15/watt for solar energy systems.

SunEdison has also set its goal for fiscal 2014 as well. During the period, the company expects Solar energy system sales volume in the range of 460 to 580 MWs while it expects to complete 900 to 1150 MWs Solar energy systems. The company expects average project pricing to range between $2.40/watt and $2.75/watt for solar energy systems in fiscal 2014.

Conclusion

SunEdison reported dismal first-quarter results. Although revenues increased on a year-over-year basis, higher-than-expected operating expenses were responsible for the disappointing bottom-line performance.

We believe SunEdison will benefit from the rise in demand for solar energy and the semiconductor business IPO that should further enable it to concentrate on its core competencies. Moreover, its recent partnerships and cost reduction initiatives are expected to expand margins.

Nonetheless, the pricing environment remains a concern for the company. Competition from SunPower Corp. (SPWR - Analyst Report) and First Solar Inc. (FSLR - Analyst Report) also remain the headwinds. Currently, SunEdison has a Zacks Rank #5 (Strong Sell). A better-ranked stock worth considering is Rambus Inc. (RMBS - Snapshot Report), which sports a Zacks Rank #1 (Strong Buy).

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