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SunPower Beats EPS, Lags Revs

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SunPower Corporation’s (SPWR - Free Report) fourth quarter 2012 adjusted earnings per share (including stock-based compensation) of 10 cents per share were in stark contrast to a loss of 3 cents per share incurred in the year-ago quarter. The reported figure easily exceeded the Zacks Consensus Estimate of 4 cents per share.

The results were driven by a diversified downstream channel strategy, solid execution on cost saves and increased customer demand for high efficiency and industry leading technology.

GAAP loss during the fourth quarter was $1.22 per share, which included one-time charges of $1.32 per share, wider than the year-ago GAAP loss of 94 cents per share.

In full year 2012, the company reported an adjusted loss of 18 cents per share, narrower than the Zacks Consensus Estimate of a loss of 62 cents per share. Including one-time charges of $2.83, GAAP loss per share was $3.01 per share.

Operational Results

SunPower generated revenues of $678.5 million, lower than the Zacks Consensus Estimate of $778 million. However, the figure was higher than the year-ago figure of $625.3 million.

In 2012, total revenue was $2,417.5 million, missing the Zacks Consensus Estimate of $2,515 million. However, the top line was above the year-ago number of $2,374.4 million.

During the quarter under review, revenues generated in the Americas were $520.2 million compared with $323.5 million in the prior-year period. Revenues in Europe, the Middle East and Africa (EMEA) were $89.4 million versus $248.6 million in the year-ago quarter. Revenues from Asia-Pacific (APAC) were $68.9 million, up from $53.2 million in the year-ago period.

SunPower’s gross margin for the quarter increased to 18.7% from 11.3% a year ago.

Financial Condition

SunPower at the end of the reported period had cash and cash equivalents of $457.5 million, compared with $725.6 million at the end of 2011. Net cash from operating activities was 141.2 million, down from $164.7 million in the year-ago quarter.


In first quarter of 2013, the company expects total revenue in the range of $475 million to $550 million. SunPower expects earnings per share in the range of 5 cents to 20 cents in the first quarter of 2013.

Our Take

SunPower reported better-than-expected results with a number of projects already in its kitty.

SunPower designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers. The company’s customer base is spread across North America, Europe, the Middle East, Asia and Australia. Its agreement with U.S. Bancorp (USB - Free Report) for $100 million in lease financing capacity in the fourth quarter has strengthened its position in the North American residential lease segment.

In Asia, the company has expanded its presence in the Japanese rooftop market. It also signed a joint venture in China to manufacture SunPower C7 Tracker product for power plant projects.  

Going forward, we are bullish on the company due to its diversified channel strategy with a strong presence in the residential and commercial market, along with its status as a conversion efficiency leader.

However, like other solar players in the industry, namely, JA Solar Holdings Co., Ltd. (JASO - Free Report) and Suntech Power Holdings Co. Ltd. , SunPower too is facing excess solar cell and module capacity. The industry at large has been affected by unnecessary inventory arising from a supply glut and a corresponding underutilization of capacity. This has led to a sharp fall in Average Selling Prices. The company presently retains a short-term Zacks Rank #3 (Hold).

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