Zacks_Analysts' Blog : SunPower Rises Above Estimates - Analyst Blog

SunPower Corporation (SPWRA) reported third quarter 2010 adjusted earnings of 26 cents per share, significantly above the Zacks Consensus Estimate of break-even earnings in the third quarter. In the year-ago quarter, the company recorded adjusted earnings of 46 cents per share.

On a GAAP basis, the company’s net profit was $20.1 million or 21 cents per share, compared with $19.5 million or 20 cents per share earned in the year-ago quarter. One-time items in the quarter included a $0.36 per share pre-tax gain related to our Fab 3 joint venture with AU Optronics.

Operational Results

SunPower generated revenues of $550.6 million, compared with $465.4 million in the year-ago quarter. Revenues in the reported quarter also rose above the Zacks Consensus Estimate of $472 million. The company’s Residential and Commercial and Utility and Power Plant segments accounted for 53% and 47% of quarterly revenues, respectively.

SunPower’s quarterly gross margin on a GAAP basis was 20.4% with an operating income of $8.1 million. In the year-ago quarter, the company’s gross margin was 21.5%, with an operating income of $46.2 million.

On an adjusted basis, SunPower reported a quarterly gross margin of 22.3% with an operating income of $45.2 million. This came in below the third quarter 2009 adjusted gross margin of 23.1%, with an operating income of $63.8 million. The company registered an adjusted gross margin of 24% and 20%, respectively, at the Residential and Commercial and Utility and Power Plant segments.

Financial Condition

At the end of the reported period, SunPower had cash and cash equivalents of $281.2 million, compared with $615.9 million at fiscal-end 2009. Convertible debt increased to $585.3 million from $536.6 million at fiscal-end 2009.

In the third quarter, SunPower repaid $143 million in convertible debentures and improved its liquidity position by executing a new $70 million revolving credit facility secured with its equity interests in Woongjin Energy. The Woongjin facility, along with the $75 million IFC loan agreement executed earlier this year, provides SunPower with access to $145 million of incremental liquidity. 

Guidance

For the fourth quarter of 2010, SunPower expects GAAP net income per share in the range of 45 cents – 60 cents and adjusted earnings per share in the range of 95 cents – $1.15. Quarterly revenues are expected in the range of $870 million – $970 million.

For fiscal year 2010, the company expects GAAP earnings per share in the range of 75 cents – 90 cents and adjusted earnings per share in the range of $1.45 – $1.65. Fiscal 2010 revenue is expected to be in the range of $2.150 billion – $2.250 billion.

SunPower Corporation 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 currently has a short-term Zacks #2 Rank (Buy). We retain our long term Neutral recommendation for the stock.