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SunPower CEO Attributes 8point3 ‘Drop Downs’ To Q1 Sales Miss

Wall Street bandied SunPower ( SPWR ) stock Thursday after the No. 2 solar company reported forecast-topping Q4 sales and earnings but issued Q1 sales guidance that halved analyst views, which CEO Tom Werner said stemmed from project “drop downs” to yield company 8point3 Energy Partners ( CAFD ). There was a 12% disparity Thursday between the high and low points of SunPower stock. Shares were up as much as 4.7% earlier, but in afternoon trading on the stock market today , SunPower stock was down 4%, near 23. Analysts were forgiving. Credit Suisse analyst Patrick Jobin says that SunPower is “bucking the trend” of solar demand challenges and investor fears of a capital squeeze. Solar is a capital-intense industry, and limited access to capital can strangle growth. “SunPower is bucking the trend and remains in a healthy position with a clean balance sheet and an execution track record that is enabling growth,” Jobin wrote in a research report. He retained his outperform rating and 32 price target on SunPower stock. EBITDA Shift Buoys Q4 For Q4, SunPower reported $1.36 billion in sales ex items and $1.73 earnings per share minus items, up 124% and 563%, respectively, vs. the year-earlier quarter. Both metrics topped the consensus view for $1.27 billion and $1.52. Earnings before interest, taxes, depreciation and amortization (EBITDA) surged 347% to $379.9 million. CFO Charles Boynton, on the company’s earnings conference call Wednesday, pointed to a $65 million shift in EBITDA after projects expected to be completed in the current quarter actually wrapped up in Q4. SunPower finished 2015 with $556.5 million EBITDA, up 49%. Sales minus items and EPS ex items came in at $2.6 billion and $2.17, flat and up 63%, respectively, and beating consensus expectations. The EBITDA shift impacted Q1 and 2016 guidance, Boynton said. SunPower lowered 2016 EBITDA guidance by that $65 million, to $450 million-$500 million, and sees $0-$25 million in Q1. For the year, SunPower expects $3.2 billion-$3.4 billion in sales minus items, where analysts had modeled for $3.42 billion. Yieldco Drops Impact Q1 Guide But the Q1 sales-minus-items view for $290 million-$340 million was far short of Wall Street views for $675.7 million. CEO Werner attributed the guidance miss to the timing of project drop-downs to 8point3. SunPower and First Solar ( FSLR ) teamed up to form the yield company last year, a company formed to own assets that produce predictable cash flows. Yieldcos are gaining headway in the solar industry. “We’re building projects in Q1 that we won’t sell to 8point3 until Q3, so we don’t get the revenue and the income until Q3,” Werner told IBD on Thursday. “It’s the timing of the ‘drop down’ of projects to Q3.” Investors are warming to the yieldco idea, Werner says. 8point3 made its IPO in June, pricing shares at 21. It now trades near 16%, up 3% Thursday afternoon. “Think of it (the yieldco) as strategic and the core of what we do,” Werner said. During Q4, SunPower dropped down its first project to 8point3 — a 20-megawatt project for California’s Kern County School District consisting of 27 carports at various locations across the district, according to a SunPower press release. And the 135-MW Quinto solar project in central California is now also generating energy for 8point3. Power Plants To Fuel Growth In 2016, Werner expects 60% of sales to stem from SunPower’s utility business. In Q4, power plants comprised 77% of SunPower’s sales. Residential and commercial accounted for 13% and 10%, respectively. SunPower’s vertical overlap and geographic expansion will help growth, Werner told IBD. On the call, he emphasized SunPower’s investment in China and the U.S. China and the U.S. are at opposing ends of the solar spectrum. China, Chile and South Africa have heavy investments in utility-scale solar. The U.S., Japan and Europe are more focused on rooftop solar. In the U.S., extension of a key subsidy, the Investment Tax Credit on solar, will help the rooftop business boom in 2016, Werner says. And companies like Apple ( AAPL ) and Stanford University have created their own hybrid — an offsite utility with a direct access line, Werner said. He also sees growth stemming from SunPower’s Helix platform, which aims to cut installation time. Werner likened it to a solar system for a modular home; the cables are precut, and a roofing company merely snaps them together. “You don’t need all the trade labor,” he said. “You can have a roofing company install a system and then just a little electrician time. It’s five to 10 times faster.” SunPower continues to partner with Tesla ( TSLA ), Sunverge and Stem for solar storage solutions. Two homebuilders in California and Germany are offering it as a standard option, Werner said.

Ingram Micro Stock Jumps After $6 Billion China Buyout Offer

Ingram Micro ( IM ) stock soared Thursday after China-based Tianjin Tianhai Investment said that it had reached an agreement to pay $38.90 a share, or $6 billion, for the Irvine, Calif.-based information technology company. Ingram Micro is a leading distributor of technology products and provider of technology services, with 2015 revenue near $44 billion. Its competitors include Arrow Electronics ( ARW ), Tech Data ( TECD ) and Synnex ( SNX ). The acquisition was announced after the market close Wednesday. Ingram Micro stock was up 21%, near 36, in midday trading on the stock market today . Arrow Technologies stock was up 3%, near 57.50, midday Thursday, while Tech Data stock was up 4% and Synnex up 2.5%. Upon close of the merger, Ingram Micro says, it will become a subsidiary of HNA Group, a China-based company described as a leader in aviation, tourism and logistics. HNA is also the largest stockholder of Tianjin Tianhai, which is a shipping, logistics and financing company. Both Ingram Micro’s and Tianjin Tianhai’s boards have unanimously approved the transaction. The offering price was a 39% premium over the average closing price for Ingram Micro’s shares over the past month. The deal is expected to close in the second half of this year. Ingram Micro says that it will suspend its quarterly dividend payment and its share repurchase program prior to the closing of the transaction. After the deal was announced, Needham analyst David Rold changed his rating on Ingram Micro to hold from buy. “While difficult to tell what HNA’s ultimate intentions for the business are, we do not expect much change in near-term competitive landscape,” Rold wrote in a research note. “Our initial checks suggest business as usual for the time being.” Moody’s Investors Service placed the ratings of Ingram Micro on review for downgrade following the announcement. “The companies did not announce whether Ingram’s existing debt will be refinanced or assumed in connection with the closing of the acquisition,” Moody’s wrote in a research note. “The rating review reflects the uncertainty related to the post-acquisition capital structure, liquidity position and financial policies. “Moody’s will also assess Tianjin Tianhai’s and HNA’s financial positions and whether Ingram Micro will need to upstream dividends to help pay for the acquisition or for other corporate purposes.” While some potential sales of U.S. tech firms to Chinese buyers have raised regulatory concerns, the sale of a tech distributor such as Ingram Micro might not fall into that camp. U.S. chipmaker Fairchild Semiconductor ( FCS ) this week accepted a buyout bid from U.S. rival ON Semiconductor ( ON ) rather than a higher offer from Chinese investors, fearing a long and tricky regulatory review. An unsolicited bid for Micron ( MU ) by China’s Tsinghua Unigroup has also withered because of regulatory concerns. Image provided by Shutterstock.

Dish Network Swings To Q4 Loss, But Online Sling Subscribers Rise

Dish Network ( DISH ) stock fell after the satellite broadcaster reported swinging to a Q4 loss, with its pay-TV subscriber numbers again falling but online Sling customers growing. Englewood, Colo.-based Dish on Thursday released full-year 2015 earnings. It did not break out Q4 financial metrics in its earnings release, though that could be determined by comparing full-year with nine-month results three months earlier. Dish Network stock was down 3.6% in early afternoon trading in the stock market today . The satellite TV broadcaster lost 12,000 pay-TV customers in the December quarter, estimated MoffettNathanson, based on nine-month financial results released in November. The Q4 subscriber loss was in line with analysts’ estimates. Dish Network combines satellite TV subscriber data with its online video Sling TV service. MoffettNathanson estimates Dish Network added 109,000 Sling customers in Q4 but lost 121,000 satellite TV subscribers. It had lost 63,000 pay-TV customers in the year-earlier period. MoffettNathanson estimates Dish Network had 503,000 Sling customers at the end of 2015. Dish Network has amassed nearly 80 MHz of radio spectrum, aiming to move into the mobile video business or find a wireless network partner. A partnership with Verizon Communications ( VZ ), or possibly T-Mobile ( TMUS ), has long been speculated, with chatter on the topic running hot and cold. In Q3, however, Dish surrendered airwaves from a 2015 auction after the Federal Communications Commission ruled its bidding partners were ineligible for small-business discounts. In 2015, operating income was negatively impacted by FCC auction expense of $516 million and an asset impairment charge of $123 million, which hit Q4 results. Dish Network reported a Q4 loss of 27 cents per share, including an impairment charge of $123 million, compared with an 88-cent profit in the year-earlier period. Analysts had modeled EPS of 12 cents. Revenue rose 3% to $3.78 billion, topping estimates of $3.74 billion.