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SunPower Reports a Net Loss in 1H15

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Yieldco again

SunPower’s (SPWR) selling, general, and administrative expenses, or SG&A, increased to $158.7 million, or 19% of sales, in 1H15 compared to $145.4 million, or 12% of sales, in 1H14. The spike in SG&A expenses was primarily attributable to the formation and IPO (initial public offering) of its joint solar yieldco, 8point3 Energy (CAFD).

As well, the company’s R&D (research and development) expenses increased to $41.7 million, or 5% of sales, in 1H15, up from $33.3 million, or 3% of sales, in 1H14. R&D labor costs and costs related to the development of next generation solar energy products are the reasons for the increase.

The increase in SG&A and R&D expenses was more than offset by gains on the transfer of assets to CAFD and lower interest expenses. But substantially less gross profit as a result of fewer revenues left the company in a net-loss position in 1H15.

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Swings to a loss

SunPower’s net loss for 1H15 came in at 3.1 million. In contrast, the company reported net income of $79.1 million in 1H14. On a per-share basis, the net loss translates into $0.02 in 1H15 against net income of $0.52 in 1H14.

SunPower (SPWR) is a key component of the Guggenheim Solar ETF (TAN) and accounts for 5.1% of the fund’s total holdings. FirstSolar (FSLR), SolarCity (SCTY), and SunEdison (SUNE) respectively account for 8%, 7.2%, and 5.6% of the fund’s total holdings.

Cash flow

Net losses and unfavorable changes in the firm’s working capital took a toll on cash flow in 1H15. The company reported -$325.4 million in operating cash flow in 1H15 and -$81.6 million in 1H14. The company spent $68.8 million during 1H15 on capital expenditures. And it received $341.2 million from the asset transfer to 8point3 Energy LP during the same period.

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