SunPower Corporation (Nasdaq: SPWR) today announced that combined revenues with newly acquired Powerlight enabled the company to reach a profit for the fourth quarter.
For the fourth quarter ended December 31, 2006, revenue was $74.5 million, up 14% from Q3 revenue of $65.3 million and up 154% from the Q4 2005 revenue of $29.3 million. GAAP net income for the quarter was $11.3 million, or $0.15 diluted earnings per share, compared to last quarter’s net income of $9.6 million or $0.13 diluted earnings per share and the fourth quarter 2005 net loss of $0.6 million.
Fourth quarter 2006 non-GAAP net income, which excludes amortization of intangible assets, stock-based compensation expense and the related tax effects, was $13.6 million or $0.18 diluted earnings per share, compared to the last quarter’s non-GAAP net income of $12.1 million and the fourth quarter 2005 non-GAAP net income of $1.5 million.
SunPower’s annual revenue for 2006 was $236.5 million, a three-fold increase from 2005 revenue of $78.7 million. GAAP net income for 2006 was $26.5 million, compared to a 2005 GAAP net loss of $15.8 million. Non-GAAP net income for 2006 was $36.1 million, compared to a 2005 non-GAAP net loss of $9.7 million.
“Throughout 2006 SunPower demonstrated consistent execution on all of our major goals,” said Tom Werner, SunPower’s CEO. “In the fourth quarter we outperformed our financial forecast and announced our PowerLight acquisition, which closed earlier this month and is expected to be immediately accretive on a non-GAAP basis. We believe the combination of SunPower’s highest-efficiency solar cell technology with PowerLight’s systems expertise, innovative products and strong, diverse channel positions creates a uniquely powerful company that can drive innovation across the entire value chain. Together we will accelerate SunPower’s growth as we work to reduce installed solar system costs by half by 2012.
“During the fourth quarter of 2006, SunPower began ramping our fourth solar cell manufacturing line, the first line to produce our Gen2, or second generation, solar cell technology,” said Werner. “We have started producing Gen2 cells with a rated efficiency of 22 percent, a full 2 percentage point improvement over our A-300 solar cells. We are on-time and on-budget with the construction of our second solar cell manufacturing facility that is scheduled to begin production in the third quarter of 2007.
“Our first captive solar panel manufacturing facility in the Philippines began limited production in the fourth quarter of 2006 and is expected to increase its volume output in the first quarter 2007. This facility is designed to manufacture SunPower’s recently introduced higher-efficiency SPR- 315 solar panels as well as our traditional 72-cell solar panels. Compared with conventional solar panels, the SPR-315 allows customers to generate up to 50 percent more power per square foot of roof area using half as many panels.
“We are pleased to report that SunPower’s silicon position has remained stable over the last quarter during a period of tight market conditions,” said Werner. “Steady progress was made by our partners, M.Setek and DC Chemical, with their new polysilicon manufacturing facilities. These new entrants to the polysilicon market supplement our silicon supply contracts with the top three incumbent polysilicon manufacturers. We have agreements to supply sufficient silicon to produce 110 megawatts of solar cells in 2007 and 250 megawatts of solar cells in 2008. We continue working to expand our silicon supplies.”
“Our PowerLight subsidiary provides large-scale solar power systems for commercial, government and utility customers worldwide,” said Werner. “In addition to SunPower’s solar technology, PowerLight procures solar cells and panels from a portfolio of third party suppliers. In January 2007, PowerLight further expanded its supply base by signing a three-year agreement with JingAo Solar Co., Ltd. for up to 120 megawatts of solar cell supply. For 2007, PowerLight has product supply agreements in place to cover over 100 percent of its forecasted requirements, of which approximately 25 percent to 35 percent will be supplied by SunPower.”
“Strong execution in the fourth quarter allowed us to grow 2006 revenue threefold over 2005 and improve fourth-quarter 2006 non-GAAP gross margin to 26 percent, up from 25 percent in the preceding quarter,” continued Werner. “During the next two quarters we plan to further improve silicon utilization and to mass produce our 22 percent efficient Gen 2 solar cells. We expect stable to slightly increasing silicon prices and stable ASPs during this period driven by strong continued world-wide demand for our products. We expect to continue to mitigate high silicon prices through better silicon utilization, improved economies of scale and incremental manufacturing process improvements.
“With PowerLight, we will grow substantially faster in 2007 than previously planned,” said Werner. “We will provide guidance for the combined company for the first quarter of 2007 and the full year as well as each stand- alone business for the first quarter of 2007. Our guidance will take into account revenue elimination related to sales of solar panels from SunPower and PowerLight. As a combined company, we believe we will achieve our stated business model financial goals of 30 percent gross margin, 10 percent operating expenses, and 20 percent operating margin on a non-GAAP basis by 2009.
“On a combined basis in the first quarter of 2007, we expect to generate $125 to $135 million in revenue, non-GAAP gross margin of 26 percent to 27 percent and diluted non-GAAP net income per of share of $0.18 to $0.20,” said Werner. “For the full year 2007, we expect the combined company to generate $640 to $670 million in revenue and diluted non-GAAP net income per share of $0.90 to $1.00.(2)
“For the first quarter of 2007, we expect SunPower stand-alone operations to generate $75 to $77 million in revenue with expected non-GAAP gross margin of 26 percent to 27 percent, non-GAAP operating income of $12 to $13 million and diluted non-GAAP net income per of share of $0.14 to $0.15,” said Werner. “This guidance is based on lower interest income and our higher income tax rate for 2007 as compared to 2006.(3)
“For the same period, we expect PowerLight stand-alone operations to generate $70 to $75 million in revenue and non-GAAP operating income of $6 to $7 million.”
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