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SunEdison -8.7% on Q1 miss, margin pressure; solar pipeline grows

  • SunEdison (SUNE) recognized revenue on 76MW of solar system sales, below guidance of 85MW-105MW. But it also retained 74MW on its balance sheet, above guidance of 50MW-60MW. The company expects to recognize revenue on 60MW-80MW of systems in Q2, and to retain 100MW-120MW on its balance sheet.
  • For the whole of 2014, SunEdison still expects to complete 900MW-1150MW of systems (+90% at the midpoint). But it now expects to recognize revenue on 640MW-580MW (down from 500MW-650MW), and to retain 440MW-570MW on its balance sheet (up from 400MW-500MW).
  • In spite of Q1 pricing weakness, 2014 average project pricing is now expected to be in a range of $2.40-$2.75 vs. a prior $2.25-$2.75.
  • Solar energy revenue rose 87% Y/Y in Q1 to $371.5M. The chip wafer division (still set for an IPO) remains weak, with sales falling 11% Y/Y to $206.1M. SunEdison's gross margin fell to 3.8% from 4.9% in Q4 and 9.7% a year ago.
  • The company's solar project pipeline rose by 173MW Q/Q to 3.6GW. Backlog fell by 73MW to 1GW. 463MW of the pipeline is under construction, down from 503MW at the end of Q4.
  • Q1 results, PR
Comments (3)
  • Rognola
    , contributor
    Comments (17) | Send Message
     
    So they completed 155MW for the quarter (at the high end of their guidance range) and they retained more for their balance sheet than the previous guidance had estimated. Does not the increase in projects retained explain the margin pressure?

     

    Where is the bad news here?
    8 May, 10:03 AM Reply Like
  • kingfrogcash
    , contributor
    Comments (142) | Send Message
     
    These financials are very difficult for retail to understand.
    The bad news is that the value of the Chip division that is set for an IPO has decreased. So the sum-of-all-parts is less, at least for that segment.

     

    You have to take the CEO's word for it, on the value of the retained Solar. So it's really the outsiders value that has to be obtained. Other outsiders have expressed concern that the retained solar to be placed in the YieldCo has a high percentage of subsidized solar. But doesn't the value of retained subsidized installed base go up, when the subsidies come off;
    because the unsubsidized green fields will cost more to build?
    8 May, 10:42 AM Reply Like
  • Rognola
    , contributor
    Comments (17) | Send Message
     
    King Frog - thanks for the mention of the Chip division and the sum-of-parts valuation. I get focused on the Solar side of the business and forget to look at everything.

     

    Your statement/question about the value of the retained solar as related to subsidies makes sense. The yield generated by subsidized assets should be greater than the yield generated by unsubsidized assets; unless other costs fall far enough to offset the lack of subsidy.
    8 May, 01:01 PM Reply Like
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