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SunPower Blasts Q4 Views; But Q1, 2016 Outlooks Lag Wall Street

No. 2 solar installer SunPower ( SPWR ) smashed Wall Street’s Q4 expectations late Wednesday but guided to Q1 sales that halved analyst views. SunPower stock seesawed in after-hours trading, trending up a fraction, having risen 2.2% in Wednesday’s regular session. Shares closed 2015 up 16% for the year, topping IBD’s 23-company Energy-Solar industry group, which ended the year up 1%. For Q4 ended Jan. 3, SunPower reported $1.36 billion in sales ex items and $1.73 earnings per share minus items, up 124% and 563%, respectively, vs. the year-earlier quarter. The company pulled in $900 million alone after completing its 135-megawatt Quinto commercial project in Merced County, Calif., CFO Chuck Boynton told analysts during the late Wednesday conference call. Power plants accounted for 77% of Q4 sales. Both sales and EPS ex items topped the consensus model of 16 analysts polled by Thomson Reuters for $1.27 billion and $1.52. Three months ago, SunPower guided to $1.25 billion-$1.3 billion in sales. During Q4, SunPower deployed 280 MW, down 10% vs. the year-earlier quarter but in line with its guidance for 275 MW to 305 MW. Among those deployments, SunPower counts a 100-MW project for Nevada’s NV Energy and a 36-MW project for Mexican airport Aeropuertos Del Sureste. And China remains a solar bright spot, SunPower CEO Tom Werner said on the call. Regulations and subsidies have helped China lead the world in terms of solar installations. “Demand in China remains robust,” he said. “We are committed to the Chinese market as a long-term driver of growth.” Q1 Sales Ex Items Guided To Fall 27% SunPower wrapped up the year with $2.6 billion in sales ex items and $2.17 EPS minus items, flat and up 63%, respectively, vs. 2014. That beat respective consensus views for $2.53 billion and $1.97. In November, SunPower guided to $2.5 billion to $2.55 billion in sales ex items. SunPower doesn’t give EPS guidance. The company deployed 1.15 gigawatts in 2015, touching the bottom line of its guidance for 1.15 GW to 1.18 GW. Current-quarter and 2016 views lagged the consensus. For Q1, SunPower guided to $290 million to $340 million in sales ex items, which would be down 27% at the midpoint. Wall Street expected $675.7 million in sales ex items and 33 cents EPS minus items. SunPower expects to deploy 315 MW to 340 MW in Q1, up from 266 MW in the year-earlier quarter. For the year, SunPower guided to $3.2 billion to $3.4 billion in sales minus items, missing the consensus model for $3.42 billion. Analysts expect $1.60 EPS ex items. Guidance for 1.7 GW to 2 GW deployed in 2016 would narrowly top the 2015 metric. Werner credited cost reductions, scaling and innovations, and regulatory support for “a landmark year” for the solar market in 2015. In late December, Congress voted in a five-year extension to the Investment Tax Credit on solar energy. The ITC was originally set to expire Dec. 31, 2016, prompting a 2017 “cliff” in installations. Also in 2015, Obama unveiled his Clean Power Plan with the goal of reducing carbon emissions by power plants, and 196 countries pledged to cut carbon emissions during a Paris climate summit. To capture share, SunPower is planning to heighten investments in the U.S., where solar is expected to account for only 3% of total power generation by 2020, Werner said. “We expect the five-year (ITC) extension should drive acceleration through 2020,” he said. “The scale of demand in the U.S. is huge, and we are planning to increase our spending here in the near term.” Canadian Solar Tops Views First Solar ( FSLR ) leads SunPower as the No. 1 solar company, with a $6.4 billion market cap to SunPower’s $3.2 billion. Together, the two formed yield company 8point3 Energy Partners ( CAFD ) last August. Canadian Solar ‘s ( CSIQ ) late Tuesday preannounced some results, posting Q4 sales and total solar module shipments that busted Wall Street expectations, FBR analyst Carter Driscoll wrote in a research report. Canadian Solar expects to report $1.02 billion to $1.07 billion in Q4 sales vs. analyst forecasts for $930 million to $980 million, Driscoll wrote. The company also upped its Q4 shipments guide to 1.35 GW to 1.4 GW, up 4% at the midpoint vs. earlier views. For 2016, Canadian Solar sees total shipments hitting 4.63 GW to 4.68 GW vs. prior expectations for 4.15 GW to 4.2 GW, and $3.35 billion to $3.4 billion in sales. Earlier views were for $3.28 billion to $3.33 billion. Canadian Solar stock jumped 18% Tuesday on that news, but they fell a fraction Wednesday.

SolarCity Torched On Q1 Guidance As Losses Expected To Deepen

SolarCity ( SCTY ) stock was torched after hours Tuesday, after the No. 1 residential installer guided to deepening Q1 losses and slower installation growth in 2016, despite CEO Lyndon Rive’s earlier pledge to curb losses by 2017. SolarCity stock was down more than 30% after the close, after the company released its Q4 earnings and gave guidance, and after falling 5.7% in Tuesday’s regular session. Shares of rival installer Sunrun ( RUN ) also wrapped Tuesday’s regular session down 7% and were down another 6% after hours. Big solar companies SunPower ( SPWR ) and First Solar ( FSLR ) were down 6% and more than 2%, respectively, after hours. For Q4, SolarCity reported $115.5 million in sales, up 61% year over year, and a per-share loss ex items of $2.37, widening from a $1.33 per-share loss in the year-earlier quarter. Both measures beat Wall Street expectations for $105.6 million and $2.59, as well as SolarCity’s three-months-ago outlook for $100 million to $108 million and $2.60 to $2.75 losses. During Q4, SolarCity installed 272 megawatts, which was up 54% vs. the year-earlier quarter but missed the company’s earlier guidance for 280 MW to 300 MW. SolarCity ended the year with $399.6 million in sales, $7.91 losses per share minus items and 870 MW installed. The consensus of 18 analysts polled by Thompson Reuters saw $389.7 million and $8.03. Installations for the year came in below prior guidance for 878 MW to 898 MW, up 73% from 2014. Current-quarter guidance for $2.55 to $2.65 losses per share ex items would deepen from $2.36 in the year-earlier quarter and would miss analyst expectations for $2.36. SolarCity didn’t offer a Q1 sales view. The consensus modeled $113 million, which would be up 57%. Shortening Cash Conversion Cycle SolarCity’s Q1 180 MW installation guide would be up 18% year over year. For the year, it expects installations of 1.25 gigawatts, up 44%, as the extended Investment Tax Credit (ITC) on solar provides more growth tailwinds. The ITC extension will lead to “good growth in 2017 and beyond,” Rive told analysts during the company’s earnings conference call late Tuessday. But SolarCity shifted its focus in Q3 to becoming cash flow positive, sacrificing its typical 80% annual installation growth rate. Rive reiterated SolarCity’s 40% growth target for 2016 despite the low 18% growth forecast for Q1. Part of that process is shortening SolarCity’s cash conversion cycle, Rive told analysts. As a result, commercial installations will be back-end loaded. “While the ultimate result will be shorter time from the start of construction to operation and thus higher cash generation, the initial impact is lower installations in the first period implemented,” according to SolarCity’s letter to shareholders. Nevada Policies Nick Q1 Installations Nevada’s decision to slash net-metering payments to solar customers also impacted Q4 installations and Q1 guidance, Rive said. During Q4, Nevada contributed 23 MW in installations and typically accounts for 20 MW per quarter. By year’s end, Rive expects Nevadans to overturn the Public Utility Commission’s late-December decision. “Homeowners in Nevada want solar, they want the freedom to choose where their energy comes from, and I think this is going to be overturned by the public, by ballot referendum by the end of the year,” he said. Solar has thrived on other policy fronts. As the Nevada battle waged, California regulators opted to continue paying solar customers for energy fed back into the grid. And in December, more than 190 countries pledged to curb carbon emissions during a climate change summit in Paris. “The majority of this (climate change agreement) is going to be on renewable energy, which is going to be solar,” Rive told analysts. Tesla Motors ( TSLA ) CEO Elon Musk is SolarCity’s chairman. Tesla is due to report earnings late Wednesday. Tesla stock rallied to close up 0.2% after falling intraday to a two-year low.

Tesla Partner SolarEdge Smashes Q2 Sales, EPS Views; Guides Q3 Up

SolarEdge ( SEDG ) stock rocketed late Wednesday after the Tesla Motors ( TSLA ) partner reported fiscal Q2 sales and earnings that smashed Wall Street expectations, while guiding to Q3 estimates also well above the consensus model. In after-hours trading, SolarEdge stock lit up more than 12%. Shares rose 2.7%, to 27.43 in the regular session in the stock market today . For its fiscal Q2 ended Dec. 31, SolarEdge reported a record $124.8 million in sales and 44 cents earnings per share ex items, up 70% and 267%, respectively, vs. the year-earlier quarter. The consensus of 10 analysts polled by Thomson Reuters had predicted $119.5 million and 36 cents, with the former in line with SolarEdge’s earlier guidance for $118 million-$121 million. SolarEdge doesn’t give EPS guidance. Current-quarter guidance for $121 million-$125 million in sales easily topped analyst views for $117.3 million. On a year-over-year basis, sales would be up 42% at the midpoint of guidance. The consensus had also modeled 35 cents EPS ex items. SolarEdge made its IPO last March, pricing shares at 18. The stock flew 139% to a record high of 43 on June 22, but SolarEdge stock encountered the same valley that plagued other solar stocks in 2015, closing the year up 56.5%. In January, SolarEdge topped Needham analyst Y. Edwin Mok’s list of solar firms for 2016 . Congress’ last-minute extension to the Investment Tax Credit (ITC) on solar freed SolarEdge from having to lower component prices in 2016. Mok now sees a mid-40% growth runway for SolarEdge in 2016. SolarEdge founder and CEO Guy Sella credited a bright strategy and business plan for the company’s Q2 success. “In addition to our revenue growth and increased profitability, this quarter we installed our first HD-wave inverter units, and we commenced shipments of our StorEdge solution,” he said in a statement. SolarEdge stock tops the 22-company IBD Energy-Solar industry group with a 97 Composite Rating out of a best-possible 99. First Solar ( FSLR ) and JA Solar ( JASO ) stocks trail with CRs of 95 and 90, respectively.