US-headquartered high-efficiency PV module producer SunPower Corp reported better than guided third quarter financial results but narrowed 2017 full-year guidance and continued net losses for the year and through 2018 highlight the competitive challenges faced by the niche player.

SunPower reported third quarter 2017 GAAP revenue of US$477.2 million, up from US$337.4 million in the previous quarter. SunPower had previously guided third quarter GAAP revenue of US$300 million to US$350 million. 

Management noted in its earnings call that it fast tracked a number of large PV projects, some of which were relatively large commercial projects in the US to be completed in the third quarter to de-risk the potential for not achieving completions and revenue recognition in the fourth quarter. 

This included the completion and sale of the 69MW Gala project as well as the sale of the interconnection facility for the 100MW El Pelicano project in Chile. The company is expecting to sell the El Pelicano PV plant in the fourth quarter of 2017. 

The company reported total Power Plant and Solutions business unit deployments of 218MW, up from 86MW in the previous quarter.

As a result, SunPower recognized around US$150 million of projects in the third quarter that may not have been completed until the fourth quarter and underlined the higher than expected revenue reported.

Despite the increased revenue, SunPower reported a net GAAP loss of US$54.2 million in the reporting quarter, which was lower than the previous quarter of US$93.8 million and lower again from US$399.1 million in the first quarter of 2017. SunPower had previously guided net GAAP loss of US$120 million to US$100 million.

However, despite higher project completions and revenue recognition, SunPower reported further gross margin declines. The company reported a GAAP gross margin of 3.3%, down from 4.5% in the second quarter and down from 7.8% in the first quarter of 2017.

Execution in SunPower’s Commercial business also improved in the third quarter, resulting in record installations of 91MW, up from 66MW seen in the first two quarters of 2017. This was supported by the completion of a 9MW ‘Helix’ project at Toyota's US headquarters. 

In the residential market, SunPower reported installations of 70MW, down from 74MW in the previous quarter. Notable developments were record deployments and strong bookings during the third quarter in respect to new homes business in the US and availability of its X-Series high-performance modules for the residential market in Europe and Japan. 

However, management noted that US cash and loan sales accounted for 63% of residential shipments, while 37% were leased with global total residential deployments of 86MW.

Tom Werner, SunPower president and CEO said, "Our distributed generation business performed well as customer demand for our complete solution products remained strong. As expected, we are seeing continued momentum in our commercial segment as we are realizing the benefits from our investments over the last year. Our third quarter performance reflected the completion of our Toyota headquarters project while traction for our SunPower Helix product continued with bookings from both new and repeat customers. 

Demand for our high quality, industry leading solutions in our residential business remains robust and is supported by our ability to offer customers multiple financing alternatives for their systems. In power plant, we benefitted from the completion and sale of our 69-megawatt (MW) Gala project while executing on our commitments for the fourth quarter including our 100-MW El Pelicano project in Chile which we expect to be sold this year, and demand in our SunPower Solutions group remains strong, with bookings now exceeding 500 MW.”

Fourth quarter and beyond momentum

SunPower noted that Power Plant and SunPower Solutions business bookings had exceeded 500MW using its ‘Oasis’ system platform. Working with parent oil company Total, SunPower has booked over 300MW of multiple PV projects under French government tenders that were awarded in 2017. 

Management noted that it expected be awarded additional panel supply agreements in the next tender rounds. Its solutions group was said to have provided equipment to customers in more than 30 countries in 2017 and planned to expand its international footprint further in 2018.

In commercial, SunPower said that its pipeline opportunity had exceeded US$2.5 billion and was expanding its commercial footprint internationally, notably in Japan that is expected to support 15% to 20% growth in 2018. 

SunPower guided fourth quarter GAAP revenue of US$635 million to US$685 million, coupled to a gross margin improved in the range of 6.5 to 8.5%. 

However, the company still expects to generate a GAAP net loss in the range of US$55 million to US$80 million in the fourth quarter. 

With the fast tracking of projects in the third quarter, SunPower narrowed full-year net GAAP revenue guidance to be in the range of US$1.85 billion to US$1.90 billion, compared to previously lowered guidance of US$1.85 billion to US$2.05 billion. Net GAAP loss in the first nine months of 2017 stood at US$282.4 million and reach at least US$337 million for the year.

In its third quarter 10K filing, SunPower said that net GAAP losses would continue through the third quarter of 2017 and were expected to continue through 2018.