SunPower (Nasdaq:SPWRA) entered the earnings confessional after the market closed today with Wall Street looking for a profit of 13 cents per share.  The solar cell efficiency leader crushed that number with Q3 GAAP EPS of 21 cents per share, Q3 non-GAAP EPS of 26 cents per share.  In the same quarter last year, SunPower posted earnings of 28 cents per share.

This strong news comes despite the words of Schaeffer's Investment Research: "Looking back, the company's fundamental performance has been abysmal, missing the consensus estimate twice in the prior four reporting periods, with an average downside surprise of 132 percent." Ouch.  Not so this quarter.

Here are some results:

  • Q3 2010 GAAP revenue of $551 million vs. $384 million in Q2 2010.  That's up 41 percent quarter-on-quarter and up 19 percent from the previous quarter.
  • Cost declined on plan and the firm is entering 2011 with record backlog. 
  • SPWR is on plan for $1.08 per watt Q4 2011 efficiency adjusted panel cost vs. 14 percent panels and $0.71 vs. 11 percent panels
  • Q3 GAAP gross margin of 20.4 percent, Q3 Non-GAAP gross margin of 22.3 percent.
  • The company is on track to meet its 2010 guidance of $2,150 million to $2,250 million at a gross margin of 22 percent to 23 percent.
  • Q4 guidance of $870 million to $970 million.
  • Very strong presence in Italy and claiming to be "number one in California."

Major recent milestones include:

  • Completed sale of 28 megawatts of Italian power plants
  • Commenced marketing for approximately euro 200 million of project debt for final phases of the Montalto solar park
  • Awarded 10 megawatt contract from LS Power to build largest solar plant in Delaware
  • Announced the availability of the company's Oasis power plant block in Europe
  • Announced more than 20 MW of federal government projects in Q3
  • Awarded largest single roof top contract in the U.S. – 3.5 MW for Macy's in Arizona
  • Completed initial cell production at company's 1,400 megawatt Fab 3 joint venture with AU Optronics
  • Repaid $143 million in convertible debentures and improved liquidity position by executing a new $70 million revolving credit facility secured with equity interests in Woongjin Energy.

SunPower continues to trumpet the advantages of high-efficiency and its benefits for levelized cost of energy (LCOE) and land usage.

A few weeks ago, we reported on a significant event in the life of SunPower:

Moodys issued a press release stating that Andromeda PV, a subsidiary of SunPower, received a $279 million loan from two French banks to build two solar PV plants at Montalto di Castro, Italy, with a combined capacity of 51 megawatts (a 45.3-megawatt project and a 6.1-megawatt project).  SunPower expects construction and financing to be completed by the end of this year.  The note has two equal tranches with two favorable investment grade ratings.  According to Vishal Shah of Barclays Capital, SunPower still needs to close debt financing and sell the equity piece in order to recognize revenues.  Additionally, this is the first investment-grade solar debt deal of meaningful size, and it signals that SunPower could continue to secure large-project financing in 2011.

Owning the project and downstream integration are keeping SunPower in the game despite high product costs. 

As of the publication of this article, SunPower's stock price was steady at $14.09.