SunPower Corporation’s (SPWRA) first quarter 2011 adjusted earnings of a penny per share came in below the Zacks Consensus Estimate of 6 cents. However, earnings were way ahead of the year-ago loss of 4 cents per share.
On a reported basis the company posted a loss of 2 cents per share versus earnings of 13 cents in the year-ago quarter. The downside came from increased expenses and lower income tax benefits year over year.
Operational Results
SunPower generated revenues of $451.4 million versus the Zacks Consensus Estimate of $485 million and $347.3 million in the previous year’s quarter. The company’s “Residential and Commercial” and “Utility and Power Plant” segments accounted for 45.5% and 54.5% of quarterly revenues, respectively. Revenues from “Utility and Power Plant” rose to $245.9 million from $144.1 million in the prior-year quarter.
In contrast revenue from “Residential and Commercial” rose only marginally to $205.5 million from $203.2 million in the year-ago quarter. During the quarter, the company's operating costs increased to $90 million from $75 million in the year-ago period, due to higher research and selling overheads.
SunPower’s gross margin for the quarter shrunk 110 basis points to 19.6% versus 20.7% year-over-year. Overall, the company digested a net loss of $2.1 million versus net income of $12.6 million in the year-ago quarter.
Financial Condition
SunPower at the end of the reported period had cash and cash equivalents of $367.9 million, compared with $499.2 million at the end of the year-ago period. Convertible debt increased marginally to $598.6 million from $591.9 million at fiscal-end 2010.
Outlook
SunPower is a vertically integrated solar company with presence across the entire solar value chain. The company designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers. The company’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies.
SunPower expects its quarterly revenue for the second quarter of 2011 to be in the range of $500 million–$550 million. Shipments for the second quarter are projected in the range of 160 MW to 190 MW.
SunPower currently retains a short-term Zacks #3 Rank, which translates into a Hold rating. This is in line with its peers like Ascent Solar Technologies Inc. (ASTI) and China Sunergy Co. Ltd. (CSUN). Over the loner run we maintain our Outperform recommendation on the company.
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