SunPower Corp. (NASDAQ: SPWR) reported second-quarter 2016 results after markets closed Tuesday. The solar panel maker reported an adjusted diluted net loss of $0.22 per share on adjusted revenue of $401.8 million. In the same period a year ago, SunPower reported earnings per share (EPS) of $0.18 on revenue of $376.71 million. Second-quarter results also compare to the Thomson Reuters consensus estimates for a net loss per share of $0.24 and $345.08 million in revenue.
On a GAAP basis, revenues totaled $420.5 million and the per-share net loss came to $0.51. Adjustments to revenues included a loss of $1.4 million on yieldco 8point3 Energy Partners L.P. (NASDAQ: CAFD) and a loss of $40.1 million on utility and power plant projects. Positive adjustments to net income included $18.04 million on the yieldco and $16.5 million on stock-based compensation expense, among other things.
The big news from SunPower Tuesday afternoon was a restructuring that will include a workforce reduction of about 1,200 employees and charges totaling $30 million to $45 million. The company said a “substantial” portion of the charges will be incurred in the third quarter and more than half the charges will be in cash. Operating expenses are expected to drop by about 10% following the layoffs.
SunPower revised its guidance as a result of the restructuring. The company now expects full-year adjusted revenue of $3.0 billion to $3.2 billion and gross margin of 10.5% to 12.5%. Prior guidance called for adjusted revenue of $3.2 billion to $3.4 billion and gross margin of 14% to 16%.
The company guided third-quarter adjusted revenues at $750 to $850 million, gross margin of 16.5% to 18.5% and EBITDA of $115 to $140 million.
Consensus third-quarter estimates call for revenues of $837.01 million and earnings per share of $0.81. For the full year, analysts are looking for earnings per share of $1.36 and revenues of $3.29 billion. Those numbers are headed down after SunPower’s new guidance.
CEO Tom Werner said:
[W]hile the long-term fundamentals for solar power remain strong, we see a number of near-term industry challenges, primarily in our power plant segment, that we expect to impact our business and financial performance in the second half of 2016. Â The extension of the Investment Tax Credit, as well as the bonus depreciation credit, while beneficial to the long-term health of the industry, has reduced the urgency to complete new solar projects by the end of 2016, with many customers adopting a longer-term timeline for project completion. Â Additionally, near-term economic returns have deteriorated due to aggressive PPA pricing by new market entrants, including a number of large, global independent power companies. Â We are also seeing customer project IRRs rising in the near term as buyers have increased their hurdle rates due to industry conditions. Â Finally, the continued market disruption in the YieldCo environment has impacted our assumptions related to monetizing deferred profits.
SunPower’s shares traded down about 12% in after-hours trading, at $13.01 in a 52-week range of $13.29 to $31.10. A new low is definitely possible Wednesday morning. Thomson Reuters had a consensus 12-month price target of $28.92 before results were announced.
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