Aided by strong industry tailwinds, SunPower exceeded the top end of its generally accepted accounting principles (GAAP) net income and adjusted earnings before interest, taxes, and amortization (EBITA) guidance to post $412 million in net income and $39 million in adjusted EBITA for the fourth quarter of 2020.
“We see significant opportunity to drive long-term growth through the expansion of our addressable market,” SunPower’s CEO Tom Werner said during a Feb. 17 earnings call.
Storage, digital solutions, and the company’s distributed generation services platform will be key to the company’s long-term growth, he said. Over the next 30 years, SunPower expects the distribution generation solar and storage market to grow to become a $65 billion market.
In January, SunPower announced plans to extend its residential installation business into seven new markets across six states by the end of the second quarter. Markets targeted for the first quarter include Tucson, Ariz.; Fresno and the Greater Central Valley, Calif.; and Orlando and Ft. Lauderdale, Fla. Later this year SunPower will launch in Denver; Raleigh, N.C.; and the Washington DC metro area. The company also said it plans to hire more than 300 field technicians across these cities in 2021 and to complete twice as many installs year over year.
The company also said in January that it would close its solar panel manufacturing plant in Hillsboro, Ore., affecting 170 employees.
Improved gross margin
During the last quarter of 2020, SunPower de-levered its balance sheet, while also lowering its cost of capital.
On the residential and light commercial customers side, improved pricing, better financing economics, and a shift to higher-margin loan and lease sales increased gross margin to 24% for the quarter.
Strong fourth quarter demand across the company’s retrofit, new homes, and light commercial business lines helped fuel a 35% increase in megawatts recognized, the company said.
Additionally, residential and light commercial customer demand for resiliency and energy management capabilities pushed attach rates for SunPower’s 26 kWh SunVault solar plus storage solution above 20% during the quarter. The company expects SunVault revenue to hit $100 million in 2021.
“We are managing the supply chain very closely,” said Norm Taffe, executive vice president of products at SunPower, adding that the company doesn’t think that supply chain constraints will limit SunVault’s ability to hit this year’s revenue expectation. Recently opened sales markets outside of California are expected to provide another driver of growth. Starting in the second quarter, the company will be able to “attack our installed base with SunVault,” Taffe said.
SunPower’s fourth quarter commercial and industrial installs rose more than 65% sequentially, accompanied by gross margin expansion and progress on cost control programs.
Demand for the company’s Helix storage solution for commercial and industrial customers also remained high, the company said. In 2020, Helix sales attach rates were above 30%, and the company installed 18 MWh during the year.
SunPower also signed during the quarter its first contracts linked to the California Public Utility Commission’s self-generation incentive program for storage, and it expanded its community solar pipeline to more than 90 MW.
According to SunPower, its combined backlog and pipeline of more than 800 MWh and its high sales attach rate for Helix leave it well placed to capitalize on increased demand for its commercial storage and services solutions.
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