Heightened Demand For Residential Energy And A Swift Response To COVID-19 Helped SunPower Achieve Relative Success In Q2
SunPower, a distributed solar and storage company, ended Q2 on a positive turnaround. Not only did SunPower have an increase in revenue, but it also exceeded its previous revenue guidance. SunPower’s success indicates that some U.S. residential solar companies have bounced back after COVID-19 shutdown businesses worldwide.
Despite expectations for overall losses in 2020, SunPower logged a GAAP net income at $19.4 million for Q2. This net income is up from a loss of $1.4 million from the previous quarter. Though this increase shows company resilience during the pandemic, it is well down from its 2019 Q2 net income of $121.5 million.
Despite SunPower’s success, the company also reported a non-GAAP loss. The company largely attributes this loss to a long-term polysilicon contract that will remain with its manufacturing arm, Maxeon, when the two companies split. More so, SunPower’s residential installations have fallen by 20 megawatts from the previous quarter.
Even though SunPower has taken some financial hits, the company has remained relatively successful and resilient. SunPower’s relative success can largely be attributed to the company’s quick reaction to the economic impacts of the coronavirus. The company slashed executive salaries, cut work hours, and shut down all of its manufacturing sites across the globe to make up for the health and economic worries caused by COVID-19.
Additionally, CEO Tom Werner attributes the relatively resilient quarter to the increased demand for residential electricity. More so, Werner cites the company’s quick pivot to online sales during COVID-19 as another factor leading to SunPower’s resilient quarter.
Though in-person sales have since resumed in some areas, Werner said that the efficient online model “will stick long-term” since it contributes a significant portion of SunPower’s sales.
How SunPower Compares To Its Competitors
SunPower’s Q2 results show the company to be outperforming some of its main competitors, including Sunnova, Vivint, and Tesla.
Last week, Sunnova reported a positive second quarter and estimated that its customer base would grow by 40% by 2022. Despite Sunnova’s growing customer base, SunPower deployed three more megawatts in Q2 than Sunnova, which reported 48 megawatts deployed.
Additionally, SunPower deployed 7.6 more Q2 residential installations than Vivint, which added 43.6 megawatts in Q2. Vivint, which Sunrun announced it would acquire last month, reported high earning losses over Q1 and a 10% decrease in installations, a figure much lower than what was predicted.
Tesla was expected to adapt well to the halting of in-person sales because of its established online-only model. However, Tesla reported its weakest solar quarter to date.
In contrast, SunPower experienced the opposite trend. Norm Taffe, the company’s Vice President of Residential Solar, reported that SunPower hit an all-time high in network sales at the end of Q2.
Sunrun, the nation’s top installer, has yet to report Q2 results.
SunPower’s Plan for Q3
Although SunPower experienced a great turnaround from March and April, the company has not released full-year guidance for 2020. SunPower did provide guidance for Q3 though.
In Q3, the company expects to install between 95 and 120 megawatts, which would put it near the megawatt deployment of Q4 in 2019. The fourth quarter historically receives the highest amount of installation by volumes, which proves SunPower’s expectation for a successful Q3 in 2020.
Additionally, SunPower expects to drop back to losses in the coming quarter as it spins out Maxeon. At the end of this month, Maxeon will become publicly traded, and SunPower shareholders will receive one share of Maxeon per eight shares of SunPower.
While Maxeon splits from SunPower, competitor Sunrun will absorb Vivint, the second most successful residential installer in the U.S. by market share. This merger will pose a great competition for SunPower, but the company is not backing down.
In response to the merger, Werner plans to emphasize the areas in which SunPower excels, such as new-build home solar systems, custom products, and its storage business.
Werner told Greentech Media, “The net impact to us is we’re going to be more aggressive in areas where we have differential strengths.”
One place that SunPower has begun emphasizing its strengths is its storage business. SunPower already introduced its own residential storage product in California this June, and the company plans to roll out its residential system to other areas and states by the end of the year as well.
Although SunPower’s residential storage product is a “cautious ramp” compared to the aggressive storage vision of competitors like Sunrun, it now includes batteries on about 30% of systems in California, and its commercial attach rates are closer to 50%.