SunPower Corp. (SPWR) posted fourth-quarter 2013 adjusted earnings per share of 47 cents, comfortably surpassing the Zacks Consensus Estimate of 28 cents by 67.9%. Earnings in the reported quarter were also up almost 161.1% from the year-ago earnings of 18 cents. The higher-than-expected earnings evoked a positive market reaction with the shares gaining 1.61% to close at $31.62 yesterday.
The fourth quarter results was backed by strong demand for its unique, cost effective, high efficiency products in utility, commercial and residential projects.
GAAP earnings during the quarter were 15 cents per share in contrast with the year-ago GAAP loss of $ 1.22 per share. The reported GAAP figure includes a charge on utility and power plant projects of 12 cents, stock-based compensation expenses of 10 cents, non-cash interest expense of 8 cents, charges related to restructuring plan of 1 cent and a tax effect of 1 cent.
In 2013, SunPower reported earnings of $1.68 per share compared with 18 cents per share in 2012.
Total Revenue
SunPower generated revenues of $0.76 billion in the reported quarter, higher than the Zacks Consensus Estimate of $0.68 billion. Revenues were up 22.4% year over year.
During the quarter under review, revenues generated in the Americas were $0.5 billion compared with $0.4 billion in the prior-year period. Revenues in Europe, the Middle East and Africa were $0.15 billion, up from $0.12 billion in the year-ago quarter. Revenues from the Asia-Pacific region were $0.1 billion, up from $0.09 billion in the year-ago period.
In 2013, operating revenue was $2.6 billion down by 3.1% from $2.7 billion in 2012.
Operational Results
The company produced 317 megawatts (MW) of energy, up from 153 megawatts (MW) of energy in year ago quarter.
SunPower’s gross margin for the quarter was 20.4%, up 18.7% a year ago. Total operating expenses during the quarter were $0.09 billion, down 41.0% year over year.
Adjusted operating income of the company was $0.07 billion, up from 24.0% year over year for 4Q13.
Financial Condition
SunPower exited 2013 with cash and cash equivalents of $0.8 billion, up 60% from $0.5 billion a year ago.
In the reported quarter net cash provided by operating activities was $0.03 billion compared with $0.14 billion.
Guidance
For the first quarter of 2014, the company expects non-GAAP revenues in the range of $0.6 billion to $0.7 billion and gross margin in the 18.0% to 20.0% band. SunPower expects earnings per share in the range of 25 cents to 40 cents and electricity production in the range of 320 MW to 350 MW.
For 2014, SunPower expects revenues in the range of $2.4 billion to $2.6 billion and gross margin in the 19.0% to 21.0% band. The company expects earnings per share in the range of $1.00 to $1.30. It expects to contribute 1.1GW to 1.2GW of clean energy generation.
Other Company Release
Canadian Solar Inc. (CSIQ) is a Zacks Rank #1 (Strong Buy). For fourth-quarter 2013, Canadian Solar expects revenues in the range of $0.51 – $0.52 billion. The quarterly estimate is approximately 75% higher than the year-ago level at the midpoint of the guided range.
As per the Zacks Consensus Estimate, the company’s quarterly revenues stand at $0.50 billion. This company will report final results on March 5, 2014.
First Solar, Inc. (FSLR) is a Zacks Rank #1 (Strong Buy). It moved up from a Zacks Rank #2 (Buy) last week. This company will report quarterly earnings on Feb 25, 2014.
JinkoSolar Holdings Co. (JKS) was upgraded to a Zacks Rank #1 (Strong Buy) last week from #2 (Buy). JKS last earnings surprise was +288% and it holds a Zacks Recommendation of “Outperform.” It will report its next earnings on April 9, 2014.
Our Take
SunPower Corp.’s top and bottom line succeeded in beating the Zacks Consensus Estimate. Going forward, the company is expected to continue with its strong performance on the back of its diversified channel strategy and a strong presence in the residential and commercial markets.
The recent EU/China trade agreement will likely help boost prices that will make SunPower’s Europe, the Middle East and Africa (EMEA) business more profitable. These initiatives will position SunPower well for meaningful earnings growth.
SunPower’s solar cells have one of the highest conversion efficiencies available for the mass market. Higher conversion efficiency has also led to improved silicon utilization. Management also hinted that capacity expansion is on the cards for 2014 to meet rising demand.
Currently the company holds a Zacks Rank #3 (Hold).
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