SunPower Q1 Results Could Trend Lower On Lower Power Plant Revenues

SunPower (NASDAQ:SPWR) is expected to publish its Q1 2016 results in the coming weeks, reporting on a quarter that is likely to have seen the company’s revenues and earnings trend significantly lower, amid weaker revenues from the utility scale business and seasonally weaker solar installations. Here’s a quick review of what to expect when SunPower publishes earnings.

• Revenues from SunPower’s utility-scale business could trend significantly lower during Q1, given its strategy of holding on to projects on its books before selling them upon completion or dropping them down to its yieldco 8Point3 Energy Partners.
• As of January 2016, the company had only one project – the 86 MW Prieska in South Africa – classified as Sold or Under Contract, with a remaining revenue recognition of about $66 million for this year.
• Additionally, the company had another five projects (431 MW) with executed power purchase agreements to be completed in 2016 that are not sold or under contract.  There is a possibility that some of these projects could be dropped down to 8Point3, driving revenue recognition going forward.
• Residential sales could see the strongest growth this quarter (company projects 45%+ year-over-year growth), driven by strong North American demand and market share gains.
• SunPower’s commercial business could also benefit from availability of its Helix fully-integrated solar solution. Commercial margins will be a key metric to watch, as they have typically trailed behind the company average (13.3% vs. 23.9% in 2015).

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for SunPower