SunPower Reports Third-Quarter 2008 Results

October 19, 2008 by Jeff Shepard

SunPower Corp. announced financial results for the third quarter 2008, which ended September 28, 2008. Revenue for the 2008 third quarter was $377.5 million and compares to $382.8 million in the second quarter of 2008 and $234.3 million in the third quarter of last year. The Components and Systems segments accounted for 49% and 51% of third quarter revenue, respectively.

On a GAAP basis, for the 2008 third-quarter, SunPower reported gross margin of 27.1%, total operating income of $50.2 million and diluted net income per share of $0.26. These figures include non-cash operating expenses for amortization of purchase accounting intangible assets of $4.2 million, and non-cash and stock-based compensation of $18.9 million.

On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets and stock-based compensation, SunPower reported total gross margin of 29.2%, operating income of $73.3 million and diluted net income per share of $0.60. This compares with prior-quarter non-GAAP gross margin of 26.4%, total operating income of $67.6 million and $0.61 diluted net income per share. Overall gross margin improvement reflected continued growth in Components segment gross margin. For the 2008 third quarter, Components segment gross margin reached 39.2%, benefitting from higher average conversion efficiency and better silicon utilization, continued reduction in silicon costs, higher volume, and slightly higher average selling prices. System segment gross margin was 19.7%, reflecting a shift in both geographic and product mix.

"In the third-quarter, SunPower continued to demonstrate the advantage of a multi-segment, multi-geographic, vertical integration strategy as we executed very well in an evolving policy environment," said Tom Werner, SunPower’s CEO. "By leveraging our flexible model, we expanded our global footprint, opened up new markets and laid the foundation for long-term success. Overall, global industry fundamentals remain strong and demand is increasing across multiple geographies. Our cost reduction roadmap is paying dividends as we are now selling at a levelized cost of energy which is cost- effective for our customers as evidenced by our recent utility-scale announcements with Pacific Gas and Electric Co. (PG&E), and Florida Power & Light Co. With the recent extension of the U.S. Investment Tax Credit, we now have a national solar market in the U.S. with long-term visibility and significant additional demand potential in all three market segments – residential, commercial and utility. We also saw uncertainty removed from the Spanish market in the third quarter. These developments make us even more confident in our planned performance as we look into next year."