Sunpower sees results improving after massive loss in first quarter — the motley fool h gas l gas brennwert


Management said that favorable pricing in Europe and Japan helped margins in the quarter, overshadowing any weakness in the U.S. from solar tariffs. We haven’t yet seen the full impact of tariffs because, before they took effect, SunPower imported enough solar panels to last to midyear. So, strong demand is good, but expect margins to struggle if a tariff exemption isn’t granted by the Trump Administration in the next month or two.

The notable improvement coming down the pipeline for residential solar is a product SunPower is calling next generation technology (NGT) solar panels. They’ll have efficiency similar to the current X-Series (about 23%), but 40% lower manufacturing costs. That could help push gross margins over 20% long term.

Commercial solar is an improving segment for SunPower, where it is No. 1 in market share. Revenue in the commercial segment was down 1.6% in the first quarter to $131.8 million, and gross margin improved 2.7 percentage points to 6.3%. That may not sound impressive, but the business is trending in the right direction, and it will benefit as NGT solar panels are rolled out into the market.

What I found impressive was that energy storage was included in nearly 30% of new bookings in the quarter. Storage is an incremental revenue stream that doesn’t require additional solar manufacturing capacity, so any momentum in storage will help the top and bottom lines. Management also said that 100% of 2018 commercial solar capacity is booked or awarded, and the pipeline of future potential bookings is an impressive $2.5 billion.

Commercial solar is arguably the most important segment for SunPower going forward because it can leverage the company’s high-efficiency solar panels given the limited roof space of commercial buildings. And the business segment clearly has a lot of room for margin improvement. Slowly, it looks like operations are heading in the right direction.

On the future booking side, SunPower has won over 850 MW of contracts for future component sales to third-party developers, including a 145 MW project in Hawaii. These sales have a more predictable margin than the systems development generating negative margins today and aren’t dependent on factors out of SunPower’s control like interest rates.

For the year, SunPower expects to ship 1,000 MW of solar panels to power plant developers in 2018. And it expects to exit the year with over 2,000 MW of capacity in the P-Series solar panel that’s intended for the power plant market. The panel uses commodity solar cells shingled in way that boosts efficiency compared to commodity panels using the exact same cells. Capacity is being expanded in the U.S., Mexico, and China; if all goes well, this will be a growth business for years to come. The future looks brighter

The $116.0 million loss in the first quarter is definitely bad for SunPower, but the future is looking brighter. Margins should improve as NGT solar panels are rolled out into the residential and commercial markets and fewer money-losing project sales along with increased P-Series production for power plant customers will help the power plant business.

Management also seems to think conditions are getting better, increasing full-year EBITDA guidance from "positive" in February to a range of $75 million to $125 million given after the first quarter. For all its struggles the past two years, financial conditions finally look like they’re going to start improving for SunPower.