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SunPower stock soars following earnings report

SunPower Corp. stocks soared July 31 as the company reported second-quarter earnings. Executives expressed confidence during the solar panel manufacturer's earnings call that residential and commercial business would continue to grow despite supply chain constraints and the impending phase-out of the investment tax credit.

The company reported a quarterly profit of $121 million, or 75 cents per share, compared to a loss of $447.1 million, or $3.17 per share, in the second quarter of 2018. Those gains underlie analysts' expectations of record growth in the solar industry, with some estimating that up to 114,500 MW of solar power will be added globally this year. In the U.S., solar panel construction is surging, as developers are under pressure to qualify for expiring tax incentives.

Although demand exceeds supply for solar storage components, SunPower executives said they are confident that the California-based company's partnership with suppliers will continue to support revenue growth in storage. Revenues per watt will increase meaningfully over the next two years as the company attaches storage to its products, said Thomas Werner, chairman, president and CEO.

"In terms of supply chain, the good news is we've been in the storage market now in production for over a year, year-and-a-half," Werner said. "In the commercial business, we've diversified sources. It would be fair to say that supply and demand isn't always in alignment, and generally speaking, demand is greater than supply."

Executives said they have been able to diversify supply in the commercial business and expect volumes for commercial products to be substantially higher in the second half of the year. "So it's really good news for the commercial business, because as margins have now come in closer to model, we capitalize on that with volume," Werner said. Executives said they have good relationships with suppliers and that they are comfortable with sourcing for the company's Equinox residential storage system as SunPower releases the product in the back half of the year.

Werner said the company is not optimistic that Congress will pass extensions for investment tax credits, but if it does, it will be at the end of the year.

"That does affect how much we safe harbor because of course the more we safe harbor, if [the ITC] were extended in December, we'll have that extra material with no economic gain at that point," Werner said. "So we are pre-planning for that; I think that's one of the benefits of course of being vertically integrated, is we can adjust rapidly."

A study of almost 3,000 solar projects across the U.S. found that First Solar Inc. was the largest manufacturer in terms of installed capacity, at over 5,000 MW, while SunPower led the field with a weighted average capacity factor of 29.6%. First Solar will report earnings Aug. 1.