SunPower Maintains Gross Margin in 2Q15 despite Less Revenue



Cost of revenues

SunPower (SPWR) reported total cost of revenues of $310.1 million in 2Q15, or 81% of revenues. In 2Q14, that figure was $413.7 million, also 81% of revenues. In spite of reduced revenues, as discussed in Part 2, the company maintained its gross margin at 19% in 2Q15. However, there were certain deviations in the gross margins of its operating segments. The company reported gross profit of $70.9 million in 2Q15 and $94.1 million in 2Q14.

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Residential segment

The residential segment reported cost of revenues of $117 million or 77% of the segment’s revenues in 2Q15. In 2Q14, the cost was $125 million or 80% of the segment’s revenues. The gross margin came in at 23% in 2Q15, 3 percentage points higher than in 2Q14. The increased margin was the result of the segment’s improved performance in the US, partially offset by weaker performance in Japan.

SolarCity (SCTY) and Vivint Solar (VSLR) compete with SPWR in this segment. SunEdison (SUNE) has recently agreed to buy Vivint Solar (VSLR) for $2.2 billion to diversify into the residential solar segment.

Commercial segment

The commercial segment reported $58.8 million, or 93% of revenues, in cost of revenues in 2Q15. In 2Q14, this cost was $74.8 million or 88% of revenues. The gross margin came in at 7% in 2Q15, 5 percentage points lower than in 2Q14. Higher-than-expected costs and a change in project mix led to the drop in margins.

Power plants

The power plants segment reported $134.3 million as the cost of revenues in 2Q15. That’s 81% of revenues. In 2Q14, the cost of revenues was $213.9 million or 80% of revenue. This translates into gross margins of 19% in 2Q15 and 20% in 2Q14. The company completed some large high-margin solar (TAN) power projects by the end of fiscal 2014, and this resulted in the drop.


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