North Coast Solar Stocks

April 23, 2009

SunPower Reports First-Quarter 2009 Results

Filed under: EXC, FPL, PCG, SPWR, XEL — Tags: , , , , , — Jason @ 4:05 pm

Thursday April 23, 2009, 4:05 pm EDT

– Signed 3-year, 300 to 600 MW supply agreement with FPL Group in April 2009

– Awarded 17 MW power plant agreement with Xcel Energy in April 2009

– Announced 8 MW power plant development agreement with Exelon in April 2009

– Received regulatory approval of 210 MW power purchase agreement with Pacific Gas and Electric

– Booked more than $60 million in North American commercial systems projects

– Began construction of SunPower’s first Italian power plant with Api Nova

SAN JOSE, Calif., April 23 /PRNewswire-FirstCall/ — SunPower Corporation (SPWRA, SPWRB) today announced financial results for its 2009 first quarter which ended March 29, 2009. Revenue for the 2009 first quarter was $214 million and compares to revenues of $401 million in the fourth quarter of 2008 and $274 million in the first quarter of last year. The Components and Systems segments each accounted for 50% of first-quarter 2009 revenue.

“The first quarter of 2009 was the most challenging quarter we’ve seen since SunPower went public in 2005,” said Tom Werner, SunPower’s CEO. “Our quarterly performance was impacted by seasonality, the continuing effects of the credit crisis and difficult economic conditions. Despite these headwinds we were able to deliver strong gross margins in our Components business and positive non-GAAP net income. We have responded to current market conditions by moving to a demand-driven manufacturing model and reducing our planned operating expenses to align with our adjusted revenue outlook. Our recent announcements with FPL Group (FPL), Exelon (EXC) and Xcel (XEL) are representative of the range of opportunities in our utility and power plant business pipeline. Looking forward, we see positive trends emerging in a number of market segments, including the rooftop, distributed power plant and utility markets that give us confidence that we are well positioned for growth in the second half of 2009, 2010 and beyond.

“We were also pleased to announce today our expanded partnership with FPL Group through a significant supply agreement for future solar projects. This builds on our successful commencement of construction of the 25 megawatt DeSoto Next Generation Solar Energy Center in the first quarter of 2009. We look forward to working with FPL Group on future solar power plants around the country,” Werner concluded.

On a GAAP basis for the 2009 first quarter, SunPower reported gross margin of 22.3%, an operating loss of $2.5 million and a net loss per share of ($0.06). GAAP net loss per share for the first quarter of 2009 includes a $5.0 million expense, or $0.06 per share, for non-cash charges related to adoption of new FASB accounting rule FSP APB 14-1, which impacts how companies account for interest expense on convertible bonds.

On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets of $4.1 million, stock-based compensation of $9.5 million and non-cash interest expense of $5.0 million, SunPower reported total gross margin of 24.3%, operating income of $11.5 million and net income per diluted share of $0.05. This compares with fourth-quarter 2008 non-GAAP gross margin of 29.9%, operating income of $77.5 million and $0.69 net income per diluted share. For the 2009 first quarter, Components segment gross margin was 29.5% and Systems segment gross margin was 19.0%.

2009 Guidance

The company expects the following fiscal year 2009 non-GAAP results: total revenue of $1.3 billion to $1.7 billion, net income per diluted share of $1.25 to $1.75 and production of up to 400 megawatts. The company also revised its 2009 capital expenditure outlook from $350 million – $400 million to $250 million – $300 million.

For the full year 2009, the company expects the following total company GAAP results: revenue of $1.3 billion to $1.7 billion and net income per diluted share of $0.25 to $0.75. GAAP earnings per share guidance include approximately $0.20 per share of expense for non-cash charges related to the adoption of FASB accounting rule FSB APB 14-1.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent figures on the final page of this press release. Please note that the company has posted supplemental information and slides related to its first-quarter 2009 performance on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpowercorp.com/events.cfm.

                               SUNPOWER CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In thousands)

                                   (Unaudited)

                                                          Mar. 29,    Dec. 28,
                                                            2009        2008

    ASSETS

    Cash and cash equivalents                             $149,110   $202,331
    Restricted cash                                        184,462    175,277
    Investments                                             21,268     40,756
    Accounts receivable, net                               149,179    194,222
    Costs and estimated earnings in excess of billings      34,164     30,326
    Inventories                                            343,169    251,542
    Prepaid expenses and other assets                      187,491    197,637
    Advances to suppliers                                  154,526    162,610
    Property, plant and equipment, net                     687,159    629,247
    Goodwill and other intangible assets, net              231,609    236,210

         Total assets                                   $2,142,137 $2,120,158

                       LIABILITIES AND STOCKHOLDERS' EQUITY

    Accounts payable                                      $272,600   $263,241
    Accrued and other liabilities                          173,874    213,772
    Long-term debt                                         103,850     54,598
    Convertible debt                                       363,768    357,173
    Billings in excess of costs and estimated
     earnings                                                6,904     11,806
    Customer advances                                      101,072    110,394

         Total liabilities                               1,022,068  1,010,984

    Stockholders' equity                                 1,120,069  1,109,174

         Total liabilities and stockholders' equity     $2,142,137 $2,120,158

                              SUNPOWER CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)

                                  (Unaudited)

                                           THREE MONTHS ENDED
                                       Mar. 29,  Mar. 30,  Dec. 28,
                                         2009      2008      2008

    Revenue:
      Systems                         $106,097  $178,851  $177,858
      Components                       107,690    94,850   223,109
                                       213,787   273,701   400,967
    Cost of Revenue:
      Cost of systems revenue           88,351   143,264   142,591
      Cost of components revenue        77,688    77,242   147,045
                                       166,039   220,506   289,636

    Gross margin                        47,748    53,195   111,331

    Operating expenses:
        Research and development         7,964     4,642     5,970
        Selling, general and
         administrative                 42,283    33,858    50,599

        Total operating expenses        50,247    38,500    56,569

    Operating income (loss)             (2,499)   14,695    54,762

    Interest and other income
     (expense), net                    (12,094)   (1,435)  (20,742)

    Income (loss) before income taxes
     and equity in earnings of
     unconsolidated investees          (14,593)   13,260    34,020

    Income tax provision (benefit)      (8,562)    1,805    12,742

    Income (loss) before equity in
     earnings of unconsolidated
     investees                          (6,031)   11,455    21,278

    Equity in earnings of
     unconsolidated investees,
     net of taxes                        1,245       544    10,072

    Net income (loss)                  $(4,786)  $11,999   $31,350

    Net income (loss) per share:
       - Basic                          $(0.06)    $0.15     $0.37
       - Diluted                        $(0.06)    $0.14     $0.36

    Shares used in calculation of
     net income (loss) per share:
       - Basic                          84,162    80,215    84,008
       - Diluted                        84,162    84,252    86,120

    (In thousands, except per share data)
                                      THREE MONTHS ENDED
                                  Mar. 29,  Mar. 30, Dec. 28,
                                    2009      2008     2008
                                  (Presented on a GAAP Basis)

    Gross margin                  $47,748   $53,195  $111,331
    Operating income (loss)       $(2,499)  $14,695   $54,762
    Net income (loss) per share:        -         -         -
      -Basic                       $(0.06)    $0.15     $0.37
      -Diluted                     $(0.06)    $0.14     $0.36

                                      THREE MONTHS ENDED
                                  Mar. 29,  Mar. 30, Dec. 28,
                                    2009      2008     2008
                                (Presented on a non-GAAP Basis)

    Gross margin                  $51,864   $65,698  $119,749
    Operating income (loss)       $11,536   $39,097   $77,483
    Net income (loss) per share:        -         -         -
      -Basic                        $0.05     $0.40     $0.71
      -Diluted                      $0.05     $0.38     $0.69

About SunPower’s Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude non-cash charges related to amortization of intangible assets, stock-based compensation expenses, impairment of long-lived assets, interest expense, and the related tax effects for these non-GAAP adjustments. The specific non-GAAP measures listed below are gross margin, operating income and net income per share. Management believes that each of these non-GAAP measures (gross margin, operating income and net income per share) are useful to investors by enabling them to better assess changes in each of these key elements of SunPower’s results of operations across different reporting periods on a consistent basis, independent of these non-cash items. Thus, each of these non-GAAP financial measures provides investors with another method for assessing SunPower’s operating results in a manner that is focused on its ongoing core operating performance, absent the effects of amortization of intangible assets, stock-based compensation expenses, impairment of long-lived assets and interest expense. Management also uses these non-GAAP measures internally to assess the business and financial performance of current and historical results, for strategic decision making, forecasting future results and evaluating the company’s current performance. Many of the analysts covering SunPower also use these non-GAAP measures in their analyses. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data, the non-GAAP results should be reviewed together with the GAAP results and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

  • Non-GAAP gross margin. The use of this non-GAAP financial measure allows management to evaluate the gross margin of the company’s core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation expenses, impairment of long-lived assets and interest expense. In addition, it is an important component of management’s internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to evaluate our revenue generation performance relative to the direct costs of revenue of SunPower’s core businesses.
  • Non-GAAP operating income. The use of this non-GAAP financial measure allows management to evaluate the operating results of the Company’s core businesses and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation expenses, impairment of long-lived assets and interest expense. In addition, it is an important component of management’s internal performance measurement process as it is used to assess the current and historical financial results of the business, for strategic decision making, preparing budgets and forecasting future results. Management presents this non-GAAP financial measure to enable investors and analysts to understand the results of operations of the Company’s core businesses and to compare our results of operations on a more consistent basis against that of other companies in our industry.
  • Non-GAAP net income per share. Management presents this non-GAAP financial measure to enable investors and analysts to assess the Company’s operating results and trends across different reporting periods on a consistent basis, independent of non-cash items including amortization of intangible assets, stock-based compensation expenses, impairment of long-lived assets, interest expense and the tax effects of these non-GAAP adjustments. In addition, investors and analysts can compare the Company’s operating results on a more consistent basis against that of other companies in our industry.

Non-Cash Items

  • Amortization of intangible assets. SunPower incurs amortization of intangible assets as a result of Cypress acquiring the company in November 2004, in which Cypress’ cost of purchased technology, patents, trademarks and a distribution agreement is reflected in our financial statements. In addition, SunPower incurs amortization of intangible assets as a result of our acquisitions, which includes purchased technology such as existing technology, patents, brand names and trademarks. SunPower excludes these items because these expenses are not reflective of ongoing operating results in the period incurred. These amounts arise from prior acquisitions and have no direct correlation to the operation of SunPower’s core businesses.
  • Stock-based compensation. Stock-based compensation relates primarily to SunPower stock awards such as stock options and restricted stock. Stock-based compensation is a non-cash expense that varies in amount from period to period and is dependent on market forces that are difficult to predict. As a result of this unpredictability, management excludes this item from its internal operating forecasts and models. Management believes that non-GAAP measures adjusted for stock-based compensation provide investors with a basis to measure the company’s core performance against the performance of other companies without the variability created by stock-based compensation.
  • Impairment of long-lived assets. SunPower incurred an impairment of long-lived assets in the first quarter of fiscal 2008 totaling $5.5 million, which relates to the discontinuation of our imaging detector product line and for the write-off of certain solar manufacturing equipment which became obsolete due to new processes. The $3.3 million write-off of certain solar manufacturing equipment was reversed in the third quarter of fiscal 2008. SunPower excluded this item because the expense is not reflective of its ongoing operating results in the period incurred. Excluding this data provides investors with a basis to compare the company’s performance against the performance of other companies without non-cash expenses such as impairment of long-lived assets.
  • Non-cash interest expense. Under FSP APB 14-1, SunPower separately accounts for the liability and equity components of its convertible debt in a manner that reflects interest expense equal to SunPower’s non-convertible debt borrowing rate. As a result, SunPower incurs interest expense that is substantially higher than interest payable on $198.6 million in principal amount of its 1.25% senior convertible debentures and $225.0 million in principal amount of its 0.75% senior convertible debentures. SunPower excludes non-cash interest expense because the expense is not reflective of its ongoing financial results in the period incurred. Excluding this data provides investors with a basis to compare the company’s performance against the performance of other companies without non-cash interest expense.
  • Tax effect. This amount is used to present each of the amounts described above on an after-tax basis with the presentation of non-GAAP net income per share.
  • For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliations of GAAP results of operations measures to non-GAAP measures” set forth at the end of this release and which should be read together with the preceding financial statements prepared in accordance with GAAP.
                                 SUNPOWER CORPORATION
                RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
                                   (Unaudited)
                      (In thousands, except per share data)

    STATEMENT OF OPERATIONS DATA:
                                                       THREE MONTHS ENDED
                                                  Mar. 29,  Mar. 30,  Dec. 28,
                                                    2009      2008      2008

    GAAP gross margin                              $47,748   $53,195  $111,331
      Amortization of intangible assets              2,793     3,212     2,930
      Stock-based compensation expense                 823     3,714     5,171
      Impairment of long-lived assets                    -     5,489         -
      Non-cash interest expense                        500        88       317
    Non-GAAP gross margin                          $51,864   $65,698  $119,749

    GAAP operating income (loss)                   $(2,499)  $14,695   $54,762
      Amortization of intangible assets              4,052     4,317     4,210
      Stock-based compensation expense               9,483    14,508    18,194
      Impairment of long-lived assets                    -     5,489         -
      Non-cash interest expense                        500        88       317
    Non-GAAP operating income                      $11,536   $39,097   $77,483

    NET INCOME (LOSS) PER SHARE:
                                                       THREE MONTHS ENDED
                                                  Mar. 29,  Mar. 30,  Dec. 28,
                                                    2009      2008      2008

    Basic:
    GAAP net income (loss) per share                $(0.06)    $0.15     $0.37
    Reconciling items:
      Amortization of intangible assets               0.05      0.05      0.05
      Stock-based compensation expense                0.11      0.18      0.22
      Impairment of long-lived assets                    -      0.07         -
      Non-cash interest expense                       0.06      0.05      0.05
      Tax effect                                     (0.11)    (0.10)     0.02

    Non-GAAP net income per share                    $0.05     $0.40     $0.71

    Diluted:
    GAAP net income (loss) per share                $(0.06)    $0.14     $0.36
    Reconciling items:
      Amortization of intangible assets               0.05      0.05      0.05
      Stock-based compensation expenses               0.11      0.17      0.21
      Impairment of long-lived assets                    -      0.07         -
      Non-cash interest expense                       0.06      0.05      0.05
      Tax effect                                     (0.11)    (0.10)     0.02

    Non-GAAP net income per share                    $0.05     $0.38     $0.69

    Shares used in calculation of GAAP net income
     (loss) per share:
       - Basic                                      84,162    80,215    84,008
       - Diluted                                    84,162    84,252    86,120

    Shares used in calculation of non-GAAP net
     income per share:
         -Basic                                     84,162    80,215    84,008
         -Diluted                                   85,992    84,252    86,120

    The following supplemental data represents the individual charges and
    credits that are excluded from SunPower's non-GAAP financial measures for
    each period presented in the Condensed Consolidated Statements of
    Operations contained herein.

                                      SUPPLEMENTAL DATA
                                        (In thousands)

                                      THREE MONTHS ENDED

                                        March 29, 2009
                     Gross Margin                       Interest
                                              Selling,  and
                                     Research general   other      Income
                                     and      and       income     tax
                                     develop- admini-   (expense), provision
                  Systems Components ment     strative  net        (benefit)
    Amortization
     of
     intangible
     assets        $1,841       $952       $-   $1,259          $-        $-
    Stock-based
     compensation
     expense          298        525    1,431    7,229           -         -
    Non-cash
     interest
     expense          230        270        -        -       4,521         -
    Tax effect          -          -        -        -           -    (9,547)
                   $2,369     $1,747   $1,431   $8,488      $4,521   $(9,547)

                                         March 30, 2008

                                                        Interest
                    Gross Margin              Selling,  and
                                     Research general   other       Income
                                     and      and       income      tax
                                     develop- admini-   (expense),  provision
                  Systems Components ment     strative  net         (benefit)
    Amortization
     of
     intangible
     assets        $2,168     $1,044       $-   $1,105          $-        $-
    Stock-based
     compensation
     expense        2,511      1,203      811    9,983           -         -
    Impairment of
     long-lived
     assets         1,343      4,146        -        -           -         -
    Non-cash
     interest
     expense           36         52        -        -       4,296         -
    Tax effect          -          -        -        -           -    (8,711)
                   $6,058     $6,445     $811  $11,088      $4,296   $(8,711)

                                       December 28, 2008
                                                        Interest
                    Gross Margin              Selling,  and
                                     Research general   other      Income
                                     and      and       income     tax
                                     develop- admini-   (expense), provision
                  Systems Components ment     strative  net        (benefit)
    Amortization
     of
     intangible
     assets        $1,841     $1,089       $-   $1,280          $-        $-
    Stock-based
     compensation
     expense        3,084      2,087    1,218   11,805           -         -
    Non-cash
     interest
     expense           86        231        -        -       3,875         -
    Tax effect          -          -        -        -           -     1,332
                   $5,011     $3,407   $1,218  $13,085      $3,875    $1,332
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