SunPower Gives Its Outlook for 2010, 2011

The American solar firm boasts record earnings and record efficiencies.

Eric Wesoff, Michael Kanellos March 19, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

In a market where some crystalline silicon companies are taking a severe beating (See Shyam's Q-Cells analysis), SunPower held an open house for press and an earnings call which revealed strong earnings and a relatively bright outlook.

First, the numbers from the earnings call:

2009 Year End and Fourth Quarter Numbers

SunPower reported 4Q09 results with revenues of $548M, gross margin of 21.8%, compared to $465 million in the third quarter of 2009 and $398 million in the fourth quarter of 2008.
The firm completed construction of more than 40 megawatts of large-scale power plant projects during the fourth quarter
On a non-GAAP basis for the fourth quarter of 2009, SunPower reported a total gross margin of 21.7% with an operating income of $60.3 million.
The firm ended the year with more than $925 million in cash and investments
Dennis Arriola, SunPower's CFO, said: "Despite the difficult industry conditions in the first half of 2009, we grew revenue by 6% versus 2008."
SunPower announced the conclusion of the ongoing accounting investigation related to its Philippines operations.
SunPower has a total pipeline of 1.6GW over the next five years

2010 Guidance

For 2010, revenues are expected to be between $2.0 billion and $2.25 billion
Management guidance takes into account 20% declines in module pricing, and total production of least 550MW.
For the first quarter of 2010, the company's non-GAAP guidance is: revenue of $330 million to $350 million

Press Briefing and Tour

SunPower will soon celebrate its 25th anniversary and can mark some large accomplishments:

The company has grown from 50 employees in 2003 to its current 5,000 employees across the globe, of which 650 are in the San Francisco Bay Area.
There are 500 megawatts of SunPower power plants around the world.
In 2009 the company's run rate was 400 megawatts. When their next fab in the Philippines is complete, SunPower will have 1 gigawatt of cell capacity.
All four of SunPower's acquisitions over the last five years have been in the downstream market -- making them "one of the more vertically integrated companies."

Julie Blunden, Vice President, Public Policy and Corporate Communications led the press briefing, and Thomas Dinwoodie, Founder and CTO led a brief tour of the historic Richmond, California SunPower facility. The airy, high-ceilinged building, a former Ford Model A factory, is now capped with one megawatt of solar panels on its roof.

We saw deployment examples of their massive T20 tracker system (used at the 14-megawatt Nellis Air Force Base project), the non-penetrating roof-mount T5 model and the company's solar roofing tile.

SunPower still has the world's highest efficiency commercially available solar cells -- NREL has certified a SunPower module at 20.4% efficiency and the firm's Gen 3 cells are at 24%.

Some Notes from Tom Werner CEO of SunPower

SunPower has not acquired or invested in ingots and silicon manufacturers and don’t expect that to change, he said. Instead, SunPower will continue to focus more on technology, products, utility-scale power plants and building out the channels to reach more customers.

“The profit will be in the downstream of the value chain in future years,” he said. That said, Werner stated that SunPower likely won’t sell power directly. Instead, it will sell increasingly turnkey systems to developers. “We don’t want to own,” he said.

Thin film is intriguing but SunPower likely won’t get into it. The returns will likely be greater if it continues to focus on improving its existing products.

As for competition, Chinese manufacturers are still not rivaling the company in the high efficiency end of the market.

“High efficiency is mostly talk. We don’t see Chinese companies competing with us on energy density,” he said. Werner didn’t give a name of a company, but he likely meant Suntech Power Holdings, which last year unfurled its high efficiency Pluto panels. Pluto panels do not hit the same levels of efficiency as SunPower’s best panels, but the high teens achieved by the panels beat Suntech’s regular panels.

Despite the low impact of the restated numbers and the optimism at the firm, quarterly profits were down and some analysts were disappointed by the 2010 guidance. The stock fell about 9 percent on the news.