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Did Trina Solar Meet Analysts’ 2Q16 Earnings Estimates?

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Part 3
Did Trina Solar Meet Analysts’ 2Q16 Earnings Estimates? PART 3 OF 8

How Trina Solar Beat Analysts’ Estimates for 2Q16 Revenue

Trina Solar’s 2Q16 revenue

In 2Q16, Trina Solar’s (TSL) consolidated revenue came in around $962 million, compared to analysts’ expectation of about $867 million. This means that the company’s revenue increased by nearly 18% from $817 million in 1Q16 and by nearly 33% from $723 million on a YoY (year-over-year) basis.

How Trina Solar Beat Analysts&#8217; Estimates for 2Q16 Revenue

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In 2Q16, the company recognized $60.7 million in revenues from electricity generated by its downstream solar (TAN) power projects, sales of solar power projects that are developed for sale, and EPC (engineering, procurement, and construction) services.

Why was there a deviation?

Trina Solar’s revenue rise was primarily due to higher-than-anticipated 2Q16 shipments, which resulted in a higher-than-anticipated recognition of shipments in the company’s revenue. According to its filings, Trina Solar (TSL) had given shipment guidance of 1,500 MW–1,600 MW (megawatts) for 2Q16. TSL’s shipments came in at 1,658.3 MW, as discussed earlier in this series. Also, Trina Solar’s revenue from the sale of electricity and other downstream activities in 2Q16 totaled $60.7 million, compared to $28.7 million in 1Q16.

The company records revenue from electricity generated from its downstream solar power projects as an asset on its balance sheet and recognizes this revenue when the projects are sold. Remember, when comparing the financial data of upstream solar (TAN) companies such as First Solar (FSLR), SunEdison (SUNEQ), SunPower (SPWR), Trina Solar, Yingli Solar (YGE), and Canadian Solar (CSIQ), it’s important to consider their revenue recognition model. The revenue recognition process may not be linear. As a result, reported sales can fluctuate widely.

In the next part of this series, we’ll look at Trina Solar’s 2Q16 cost performance.

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