Sunpower (SPWR) Posts Surprise Non GAAP Profit, Shares Soar Then Slide
Sunpower (SPWR), the big US solar power manufacturer and project developer, posted a surprising non GAAP profit after the bell last night and the stock has rocketed higher today on heavy volume. The CEO acknowledged it was a messy quarter of one time adjustments and costs, but on an adjusted basis taking out one time charges, the company posted .16/share in profit which was well ahead of analyst estimates that called for a .05/share loss. Traders sent the stock up nearly 30% at the high point today, but gave much of it back closing at up around 9%.
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Here are some highlights made by executives ..
- finished the year with a better than expected 4th quarter, finishing the year with record revenue and shipments
- achieved initial volume production of next gen Maxeon Gen 3 with cell efficiency of 24%
- partnership with Total SA (which owns a majority of Sunpower) solidifies company as a leading solar player with a strong balance sheet
- Utility and Power Plant biz continues to outperform
- completed permitting process for 3 contracts with SoCo Edison for 711MW
- residential and commercial remains challenging, but maintained leadership position driven by strong demand for residential leasing product
- Tenesol acquisition will expand global footprint across 18 countries
Looking ahead, the company is providing revenue guidance of $500 – $575 million for this quarter and an EPS loss of .05 – .20. The guidance doesn’t compare well to analyst estimates for the quarter ($610, -.11) and is probably the reason the stock erased much of the gain by the end of the day. For the full year, the company sees revenue of $2.6 – $3 billion (analysts predict $2.72 billion) and is committed to breaking even or achieving greater profitability. Not exactly inspiring words.
Technically, I like the stock at this level. Today’s reversal likely means it will be under a bit of pressure and test support at the 50 dma in the coming days, but a hold there would be a real nice entry point on a leading US solar company.
Suntech Power (STP) Posts Better Than Expected Prelim Results
Suntech Power (STP) is out this morning posting preliminary results for Q4 2011 and the results are considerably better than expected. The stock soared at the open up around 20%, but has given much of that back and is currently up around 12% on heavy volume.
The company says it has exceeded previous guidance and will post revenues in the $610 – $630 million range with full year shipments above the previous guidance of 2GW at 2.09GW. The company more than doubled its accounts receivable and inventory reduction goal of $200 million with a $450 million reduction.
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Dr. Zhengrong Shi, Suntech’s Chairman and CEO, said, “Our sales and operations teams both performed well in the fourth quarter, enabling us to achieve key goals and improvements across our business. We exceeded shipment guidance and improved our cash position through ongoing management of accounts receivable and inventory. We also completed the impairment assessment for the third quarter of 2011. The charges that we incurred were all non-cash and will not impact our operations moving forward. We will continue to implement the initiatives necessary to maintain our position as the leading supplier of solar panels.”
Suntech will post official earnings results on March 8th ahead of the bell.
Technically, shares of STP continue to look very good and I continue to hold the position I added back in November when I believed solar stocks were showing signs of bottoming out. I may add another position soon.
Tesla (TSLA) Reports Mixed Results, But Sees Strong Model X Demand
Tesla Motors (TSLA) reported earnings last night that were mixed. Quite frankly I couldn’t care about earnings with Tesla right now and I think most analysts would agree. This is still a development stage company that has yet to test the “more mainstream” electric car market. For now this is a company trading on potential and many have high hopes for both the Model S electric sedan expected to hit the streets in July as well as the Model X, which was unveiled last week and is expected to go on sale next year. According to the company, demand is already strong for the Model X with 500 reservations in the first day. Assuming an average price in the $75K range for the Model X, that equates to about one quarter’s worth of current revenues (close to $40 million) using current trends. Not shabby at all.
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Let’s take a look at the quarter. The company reported a bit wider loss than analysts expected at .69/share (vs the estimate for .63) on revenues that were a bit above what analysts were expecting ($39 million vs $37 million).
I’ll just highlight some key comments made by Tesla here…
- officially announced development program with Daimler for production of electric Mercedes-Benz using Tesla powertrain. You might recall that Tesla announced a letter of intent for the deal during its last earnings report
- as mentioned above 500 reservations in first day for Model X
- fully assembling beta Model S vehicles completing 30 of about 50 they plan to produce. On track for July launch. Release candidates expected to be produced soon.
- added over 1500 new Model S reservations during the quarter, bringing total to 8000
- added three new design stores in Bellevue, WA, Chicago, IL and Newport Beach, CA,
and a Tesla Gallery in Houston, TX. Expects to open 8-10 new stores and 10 -15 service centers this year.
- Model X production to begin late next year and ramping up in early 2012
- Daimler recently issued Tesla an initial purchase order to develop a full powertrain for a new, all-electric Mercedes-Benz. Will start recognizing revenue from this deal in Q2.
- The Toyota RAV4 EV program continues on schedule with plans to ship complete powertrain systems under the production contract starting in Q2
- Tesla is providing revenue guidance of between $550 – $600 million with most of that coming in the 2nd half of the year following the Model S release. That’s ahead of the analyst estimate for $520 million in revenue. For 2013, analysts expect Tesla to finally start socking away some big profits with revenues of $1.6 billion.
Technically, I stand by my prediction from my last article that Tesla will soon retest the highs around $35 – $36 and likely break through before the year is out in anticipation of the Model S and Model X releases.
Disclaimer: I currently have no position in Tesla.
Itron (ITRI) Surges After Smashing Estimates, Acquires SmartSynch
Itron (ITRI) continues its torrid run off the bottom after reporting earnings results that smashed analyst estimates. The company reported a non GAAP EPS of $1.19/share on revenues of $642 million vs the analyst estimates for .87 EPS on revenues of $547 million. That’s a sequential revenue increase of 4% sequentially and 8% quarter over quarter.
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“Our fourth quarter results produced record revenue and cash flow but our profitability was impacted by restructuring charges, the finalization of the goodwill impairment and a warranty charge,” said LeRoy Nosbaum, Itron’s president and chief executive officer. “Our core operating results across electric, gas and water continue to be strong and we are focused on building a platform and infrastructure to support long-term growth and improved profitability.”
The company offers the following guidance for the full year. It expects revenues in the range of $2.1 – $2.3 billion (analysts predict $2.26 billion) and EPS between $3.80 – $4.20 (analysts expect $3.87).
Itron also announced an agreement to acquire privately held SmartSynch for $100 million which they believe will add approximately $50 million in revenues and be dilutive to non-GAAP net earnings per share by less than $0.10 for fiscal year 2012. The acquisition is anticipated to be accretive to revenue and non-GAAP earnings per share in fiscal year 2013. SmartSynch is a leading provider of point-to-point smart grid solutions that utilize a cellular network for communications. The company has more than 130 customers, including nine of the top ten utilities in North America.
Technically, shares of ITRI are looking much better than last year when the stock was trying to put in a bottom. With the stock up about 75% off that bottom, it’s best to wait for a pull back or sideways consolidation off today’s gap up.
MEMC Electronic Materials (WFR) Misses, Offers No Guidance, Shares Hold Steady
MEMC Electronic Materials (WFR) reported mixed results last night with a non GAAP EPS loss a bit wider than expected at .09 vs the analyst estimate for a .06/share loss, but on better than expected revenues of $772 million (down 19% over the year ago quarter). Shares were likely trading up pre-market because the non-GAAP loss wasn’t quite as severe as the company has expected about a month ago.
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The company continues to struggle with its semiconductor and solar wafer business, led by a steep decline in its solar wafer revenue due to continued weak pricing. The company was salvaged in the quarter with strength in its SunEdison division which was up 32% over last year and 33% sequentially.
Here are a few highlights of comments made by CEO Ahmad Chatila..
- prolonged and severe solar market dislocation
- solar connections doubled in 2011, sees strong growth in 2012
- uncertainty regarding FIT’s and credit markets in Europe remain a challenge
Due to uncertainty in the semiconductor and solar markets the company has not provided guidance, but is providing a general outlook. They see revenues decreasing 10 – 15% this quarter over last quarter, but orders picking up in Q2. For the full year, the see revenues picking up in the 2nd half.
Technically, it still appears that the worst is out of the way for shares of WFR. Even today, with this poor report (missing on EPS, big restructure charge and no specific guidance), shares were up pre-market and holding flat now. The key is support of that 50 day moving average right around the $4.50 level. It’s important that the level hold in the coming days or there is considerable risk of the stock retesting the lows. I do think this is a company that is compelling down here with the big restructuring charge out of the way, but I’d be patient and see how it trades over the next couple weeks.
Nexxus Lighting (NEXS) Announces New LED To Replace Incandescent BR30 65W
Nexxus Lighting (NEXS) made a key technical move a couple days ago, surging with heavy volume above the 50 day moving average on news the company will commercially sell its new LED BR30 bulb in March.
The LED is expected to replace the incandescent 65W BR30 bulb and use about 85% less energy. It incorporates an enhanced dimming circuit, 2nd generation technology allowing for significant reductions in cost and weight and is expected to exceed ENERGY STAR standards. While initially priced at $29 per bulb, the company believes the cost will drop quickly and depending on demand could get below $20.
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The company estimates that the new LED bulb would not only reduce energy 85%, but the need for 24 incandescent replacement bulbs over the life span of one LED. Now, let me just remind the LED naysayers who repeatedly overlook all the associated costs with incandescent vs LED bulbs and say LED is still way too expensive (they often over look the labor of the replacement cost). Sure the initial cost can be significant and the savings in bulbs over the lifetime of an LED is relatively meaningless (in this case about $75 for 25 incandescent bulbs vs $29 for the LED). It’s the energy savings and the maintenance costs that really begin to pay off. With some rough calculation I estimate the break even point to be about a year or so in this case. After a year, possibly two in some cases, the savings can be significant for a large company.
Technically, shares of NEXS look intriguing down here with that move above the 50 day moving average. I mentioned back in November that I liked the stock and it’s dipped a bit further from there, but I still like it down here. It’s a compelling entry point here.
Disclaimer: I have no position in NEXS currently, but considering a position within a few days.
Energy Conversion Devices (ENER) Files For Bankruptcy
It was really just a matter of time for Energy Conversion Devices (ENER). The once promising leader in flexible thin film solar filed for bankruptcy protection this morning, dousing the optimism of recent wins by wholly owned subsidiary United Solar which the company plans to sell. USO landed a deal for integrated rooftop solar in Italy and most recently a deal with SolarFocus to power Amazon’s Kindles through solar. That subsidiary would make a nice asset for a more financially sound solar company. Yesterday, the company sold majority owned subsidiary Ovonic Battery to BASF Corp for $58 million.
The bottom line is that ECD’s current financial position and operations were unsustainable without bankruptcy, but the company did say it has enough cash to operate throughout Chapter 11 proceedings without the need for financing. However they also acknowledged not being able to pay previous creditors and that stockholders are SOL. That’s fancy financial jargon for shit outta luck.
“We firmly believe there is a strong and sustainable commercial market for UNI-SOLAR products. USO’s next-generation, 12% efficient, flexible PV products build upon 25 years of PV experience and enable highly competitive production costs with a fundamentally differentiated product. However, our current capital structure and legacy costs are preventing USO from making the investments necessary for the future of the business without restructuring through the bankruptcy process,” said Julian Hawkins, ECD’s President and Chief Executive Officer. “The processes we initiated today will afford greater opportunity for ECD to maximize value for its stakeholders and conduct an orderly sale of USO to ensure it is viable and successful for the long-run.”
Solar skeptics will undoubtedly run with this news as further evidence that solar doesn’t work and should be abandoned. That’s unfortunate because the bankruptcies we’ve seen in solar over the past year is a natural part of a young, but maturing industry. This isn’t the end of it. We’ll see further consolidation through mergers, buyouts and bankruptcies and that’s all part of the process.
Tesla (TSLA) Showcases Model X
Let the hype begin for Tesla’s Model X, the electric crossover vehicle slated for launch in 2014. Some might say it’s a bit early to begin showcasing the prototype vehicle when the Model S is still months away from hitting the streets, but Musk is driven to prove doubters wrong and never shies away from delivering a big press event. Musk summed up a description of the vehicle with bravado saying, “We’ve created a car that has more functionality than a minivan, more style than an SUV and more performance than a Porsche 911 Carrera.”
Sounds like quite a car and by the looks of it, it is. The vehicle features a big 17″ touchscreen in the console, seating for 7, fly away rear doors and that Porsche like acceleration. Performance specs in terms of mileage haven’t been released but most expect it to underperform the Model S sedan due to its heavier weight. Add seven adults and you may just having some difficult getting to the first charging station! Pricing hasn’t been released either, but expect it to be a bit pricier than the Model S which would likely push it above $100k with most of the options in place.
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Technically, shares of TSLA have been on a wild ride in recent weeks. You might remember the big plunge after the departure of two key engineers. Most analysts believed the fears were overblown and shares recovered immediately and are up about 50% off those lows. Expect some kind of pull back/consolidation off that move back to what is key support around the $28 – $29 range. Should that move occur, that would be a much better place to initiate a position or add to a position. I would expect that shares would eventually retest and possibly clear all time highs around the $35 level heading into the launch of the Model S later this year.
China Ming Yang Wind Power (MY) Gets 125MW Wind Farm Deal, Looking More Bullish
Wind energy stocks have had the breeze at their back recently and China Ming Yang Wind Power (MY) has benefited from a resurgence in the sector. The company also announced some good news yesterday in the form of an EPC contract for two wind farms with a total capacity of 125MW in Bulgaria. The deal was actually inked back in December but the announcement wasn’t made until yesterday. The first batch of wind turbines were shipped out on Feb 6th. The deal is expected to provide further opportunities for the company in E. Europe.
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The first pilot project of 4.5MW is expected to be completed and commissioned in Somovit by mid summer while the larger 120MW portion is expected to commence in the 2nd half of the year.
“This represents a significant milestone of Ming Yang’s overseas market development, marking an important step in extending our footprint in mainstream European markets,” said Mr. Chuanwei Zhang, Chairman and Chief Executive Officer of Ming Yang. “Our strategic partnership with W. Power is a strong endorsement of our capabilities and innovative business models for overseas markets, which are designed to provide total EPC solutions by combining equipment, technology, capital and financing support.
As mentioned above Ming Yang is looking much better technically in recent months with a high volume surge above resistance of the 50 day moving average in mid January followed by an orderly digestion of gains in recent weeks. Look for a breakout from this recent consolidation as another entry point for a trade.
PowerSecure (POWR) Lands $15 Million In LED Lighting Contracts
PowerSecure (POWR) has announced this morning $15 million in new LED lighting orders from three major retailers which include reach in case lights, walk in freezer/cooler lights as well as shelf and canopy led lighting. The retailers expect to improve lighting quality while seeing a 70% reduction in energy usage. The PowerSecure brand of LED lighting is specifically engineered with retailers in mind to improve the customer experience.
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“We are excited to announce these new orders to serve three major retail chains with our LED lighting products. Our lighting technology is designed to deliver exactly what our customers want – lights that make their product displays “pop”
Shares of POWR aren’t moving on the news as the deal only represents about 15% of a quarter’s revenue, but this deal could lead to more orders from the retailers down the road so shouldn’t be overlooked. Technically, the stock is much improved and has been trading above resistance of both the 50 and 200 day moving averages for several days. It’s up over 20% since I called the shares “bullish in the short term” Jan 5th.
