SunPower Posts a Strong Q2 With Solar Growth in Japan, EU and US

Solar companies are making a profit and have an optimistic outlook. Welcome to 2013.

Eric Wesoff July 31, 2013

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.

Solar panel manufacturer and project developer SunPower posted second-quarter revenue of $576.5 million, net income of $19.6 million, and beat estimates on earnings-per-share and margin. The vertically integrated American solar company had a Q2 that improved on its first quarter, boding well for full year 2013. (Download the SunPower earnings presentation here. Here's a transcript of the earnings call.)

SunPower CEO Tom Werner said, "We are seeing a turnaround in our European business," and noted a third straight quarter of financial improvement and a stabilization in industry conditions and pricing, predicting "profitability in the EMEA region by the end of 2013" during today's earnings call.

SunPower showed strength in a number of markets, including the Japanese residential space and the American residential, commercial and utility domains.

Highlights

Gross margin of 19.5 percent in Q2, above guidance and attributed to cost reductions
Werner sees the firm as "capacity-constrained" for the next eighteen months. All of SunPower's factories are running at 100 percent utilization.
SunPower looks to recognize 1 to 1.1 gigawatts in module shipments in 2013
Panel installation completed at the 250-megawatt California Valley Solar Ranch, and project completion is expected by year's end. Construction continues on the 579-megawatt Solar Star project for MidAmerican.
$150 million was raised in new residential lease financing in a program with 18,400 customers and about 147 megawatts booked to date with $528 million in net aggregate payments.
APAC margins were up in the fourth consecutive quarter of record shipments, driven by Japan and a 10 percent Japanese market share through Toshiba and Sharp
The C7 concentrator product has small deployments in Arizona, China, and the Middle East. Werner noted that the cost of its standard tracker product has fallen so the firm has to be careful not to cannibalize its own systems business with the C7.

Werner suggested that the company's 1.5-megawatt Oasis power module is "key" to its success. By standardizing the system with no on-site engineering, the 1.5 gigawatt of installed Oasis product has lower balance-of-system costs, along with faster standardized work processes.

Howard Wenger, SunPower's President of Regions, sees Chile as "a potential breakout country" for solar and said that Q2 was "a great quarter for distributed generation."