SolarCity’s operating losses
The downstream solar (TAN) business is capital intensive and requires huge upfront capital for the sale of solar products and services. Revenues are recognized over the term of lease or PPA (power purchase agreements), typically over 20 years.
As the industry is still in its growth phase, operating losses are common among downstream solar players like Sunrun (RUN), SolarCity (SCTY), Vivint Solar (VSLR), and the downstream operations of SunPower (SPWR).
SolarCity reported operating losses of $647.8 million for fiscal 2015, as compared to ~$335.6 million during fiscal 2014. The increase in operating losses is mainly due to the rise in operating expenses and the fall in gross profit per installed watt from its primary revenue generating segment.
The gross profit per installed watt from operating leases and solar energy systems and incentives segment came in at ~$0.15 in fiscal 2015, as compared to $0.16 in fiscal 2014.
Adjusted net losses and cash flows
SolarCity reported an adjusted net loss attributable to common stockholders at $55.1 million for fiscal 2015, as compared to $52.2 million in fiscal 2014. The company’s adjusted diluted LPS (loss per share) came in at $0.57 in fiscal 2015, as compared to $0.56 in fiscal 2014.
Cash from operating activities came in at -$789.9 million in fiscal 2015, as compared to -$217.8 million in fiscal 2014, mainly due to the rise in the deferred cost of MyPower loans, an increase in inventories, and a fall in tax benefits of exercising stock options.
SolarCity utilized more than $1.7 billion in investment activities during fiscal 2015, which represents a rise from the more than $1.3 billion in fiscal 2014. The company raised ~$2.4 billion from financing activities in fiscal 2015, as compared to nearly $1.5 billion in fiscal 2014.
Continue to the next part for a look at SolarCity’s debt and liquidity profile.