SunEdison Inc. (SUNE) reported fourth-quarter loss per share of 48 cents, which compared unfavorably with the Zacks Consensus Estimate of earnings of 12 cents. Moreover, the non-GAAP loss per share as against year-ago quarter earnings of 8 cents per share.
Quarter Details
Although non-GAAP revenues (including adjustments related to Solar Energy business from direct sales and Financing sale-leasebacks) increased 36.4% year over year to $960.7 million, it fell short of the Zacks Consensus Estimate of $1.09 billion. The year-over-year rise in revenues were aided by higher solar project sales (up 58% year over year) which offset lower sales of semiconductor materials (down 10% year over year).
During the quarter, SunEdison completed 333 megawatts (MW) of Solar Energy project while retaining 127 MW on the balance sheet worth $257 million.
SunEdison’s non-GAAP gross margins were down from 13.1% reported in the year-ago quarter to 4.9% primarily due to lower solar project, solar materials and semiconductor materials margin.
The company’s operating loss of $123.5 million for the quarter significantly deteriorated from $52.0 million operating profit reported in the year-ago quarter. The year-over-year decline was attributed to higher operating expenses related to one-time expenses related to a VIE and continuous investments in DG and flow segments.
SunEdison reported non-GAAP net loss of $128.7 million or 48 cents compared to $19.9 million or 8 cents.
SunEdison exited the fourth quarter with cash, cash equivalents and restricted cash of $643.6 million compared with $757.4 million in the previous quarter. Long-term debt (excluding current portion) stood at $875.8 million. SunEdison used $413.3 million cash in operations.
Conclusion
SunEdison reported dismal fourth-quarter results. Although revenues increased on a year-over-year basis, higher-than-expected operating expenses were responsible for the disappointing bottom-line performance.
We believe SunEdison will benefit from the rise in demand for solar energy and the semiconductor business IPO that should further enable it to concentrate on its core competencies. Moreover, its recent partnerships and cost reduction initiatives are expected to expand margins.
Nonetheless, the pricing environment remains a concern for the company. Competition from SunPower Corp (SPWR) and First Solar Inc. (FSLR) also remain the headwinds. Currently, SunEdison has a Zacks Rank #5 (Strong Sell). A better-ranked technology stock worth considering is Lexmark International (LXK), which sports a Zacks Rank #1 (Strong Buy).
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