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SunEdison Reports Modest Revenue Growth in 2Q15

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Aug. 24 2015, Published 1:26 p.m. ET

The divergence

While FirstSolar (FSLR) reported a 65% increase in its revenues primarily by selling projects to Southern Company (SO), SunEdison (SUNE) gave up on higher revenue growth by retaining projects on its balance sheet. The company reported $455 million in revenues in 1Q15, a modest 5.6% growth compared to 2Q14’s $431 million.

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Renewable energy development segment

Under the renewable energy development segment, SunEdison (SUNE) builds and operates power plants and solar systems. This segment crudely resembles FirstSolar’s (FSLR) systems segment, as we discussed in Part 1. SUNE and FSLR are part of the Guggenheim Solar ETF (TAN) and the SPDR S&P 500 ETF (SPY). FSLR and SUNE account for 8.3% and 5.0% of TAN’s total holdings, respectively.

The segment reported $329 million in revenues in 2Q15, $98 million lower than 2Q14’s $427 million. According to the company’s filing, the fall was primarily attributable to the “strategic decision to retain ownership of certain renewable energy systems.” Sales of renewable energy systems dropped to 47 megawatts (or MW) in 2Q15 from 90 MW in 2Q14. The average price per watt too fell to $2.25 in 2Q15 from $2.55 in 2Q14.

On a positive note, systems sales to residential and commercial customers saw an increase of $24 million in 2Q15 due to the acquisition of Energy Matters in 3Q14.

TerraForm Power

TerraForm Power (TERP) helped SunEdison (SUNE) clock an overall increase in revenues. The segment reported $130 million in revenues in 2Q15 compared to $22 million in 2Q14, primarily on account of higher electricity sales. Higher electricity sales were a result of substantially higher capacity in 2Q15, in turn as a result of new projects acquired or operationalized after 2Q14. Retaining projects on its balance sheet is SUNE’s strategy to create an asset base to drop down to TERP and the newly formed yieldco, TerraForm Global (GLBL).

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