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SunPower Reports Net Income Drop in 2Q15

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Yieldco effect

SunPower’s (SPWR) selling, general, and administrative expenses, or SG&A, increased to $81.5 million, or 21% of sales, in 2Q15. In 2Q14, SG&A was $71.5 million, or 14% of sales. The spike in SG&A expenses was primarily due to the formation and IPO (initial public offering) of its joint solar yieldco, 8point3 Energy (CAFD). The increase in SG&A was more than offset by gains on the transfer of assets to CAFD. What’s more, interest costs dropped to $8.5 million in 2Q15 from $16.3 million in 2Q14, as the company refinanced its high-cost debt with low-cost debt in late fiscal 2014.

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Net income drops

In spite of lower interest expenses, SunPower’s net income dropped in 2Q15 due to less gross profit. The company’s net income for 2Q15 came in at $6.5 million, down from 2Q14’s $14.1 million. On a per share basis, the firm’s net income translates into $0.04 in 2Q15 against $0.09 in 2Q14.

In comparison, SolarCity’s (SCTY) losses narrowed to $22.4 million in 2Q15 from $47.7 million in 2Q14. For its part, SunEdison (SUNE) reported a spike in net losses to $263 million in 2Q15 from $41 million in 2Q14. FirstSolar (FSLR) saw net income rise to $94.5 million in 2Q15 from $4.5 million in 2Q14.

Cash burn

While SPWR remained profitable, it burned a substantial amount of cash during 2Q15. Operating cash burn came in at $212 million in 2Q15 against cash burn of $50.5 million in 2Q14. The additional cash burn was a result of a substantial increase in project assets. These were primarily related to the company’s Quinto Solar Project (TAN) in California that’s expected to be completed this year. The company received $341.2 million from the asset transfer to 8point3 Energy during the quarter.

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