The California-based solar company beat earnings expectations though it continues to struggle with tough market conditions in Europe and global oversupply issues.
The company had $551 million in revenue, up 18 percent year over year. And net income climbed 3.1 percent year-over-year to $20.1 million. While that’s all good news, the company also lowered fourth quarter earnings expectations.
The weak European market put a wet blanket on an otherwise chipper report about growing utility-scale and residential rooftop solar installations in the United States and Japan.
But company leadership reassured stockholders that SunPower is solvent and working toward continued growth and profitability in a conference call this week.
“Against the backdrop of highly challenging industry conditions, we increased revenue in a number of key markets,” said SunPower CEO Tom Werner. “We also strengthened our balance sheet reducing inventory by more than $40 million and exiting Q3 with more than $375 million in cash.”
Two large utility-scale projects, including the 600-megawatt Antelope Valley Solar project in California that Werner said the company is preparing to close financing on, should give SunPower predictable income.
“These two projects provide us long-term financial visibility as both CVSR and ABS together will provide approximately one-third of our revenue each year for the next three years,” Werner said on the call.
In addition, SunPower has been working with solar leasing companies and continuing to grow its domestic residential business.
“In the North American Residential market, we were once again, by far, the largest lease provider,” Werner said.
He said that about 40 percent of rooftop solar lease agreements in California used SunPower panels and the US customer base is 60,000 strong.
While outperforming much of the competition, SunPower is not idling, Werner said. The company is still investing heavily in research and development and will release its third generation solar cell this year. With 24 percent efficiency, it’s the most efficient in the industry, Werner said.
The company also announced a 25-year warranty, the longest in the industry.
SunPower is also looking to expand in other markets, hoping to close on deals in India and China within the next few quarters.
The company is prepared for significant growth in Japan. Werner said he believes SunPower is well positioned in that market because of its superior rooftop product and a strong distribution relationship with Toshiba. SunPower’s shipments to Japan increased 33 percent in the third quarter.
If it had not been for weakness in the European market, the company would have realized significant gains, said chief financial officer Charles Boynton.
“We saw outperformance in North America and Japanese markets,” Boynton said, “but the strength was more than offset by the continued weakness in Europe.”
The gross margin there was negative 23 percent, he said.
Werner said SUnPower remains committed to the European market and returning it to profitability.