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Trina Solar Missed Analysts’ 3Q16 Revenue Estimates

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Nov. 28 2016, Updated 8:05 a.m. ET

Trina Solar’s 3Q16 revenue

In 3Q16, Trina Solar’s (TSL) consolidated revenue came in at around $741.0 million compared to analysts’ expectations of about $823.0 million. That means the company’s revenue fell nearly 23.0% from $962.0 million in 2Q16 and nearly 7.0% from $793.0 million during the same period in 2015.

In 3Q16, the company recognized $60.6 million in revenues from electricity generated by its downstream solar (TAN) power projects, sales of solar power projects that are developed for sale, and EPC (engineering, procurement, and construction) services.

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Why was there a deviation?

The deviation from analysts’ expectations was primarily due to lower-than-anticipated 3Q16 shipments, which resulted in a lower-than-anticipated recognition of shipments in the company’s revenue. As we’ve already seen, Trina Solar missed the bottom end of its 3Q16 external module shipments guidance by nearly 11.0%.

An overall fall in module ASPs (average selling prices) had a negative impact on the company’s top-line growth during 3Q16. Trina Solar’s revenue from the sale of electricity and other downstream activities in 3Q16 totaled $60.6 million compared to $60.7 million in 2Q16 and $15.3 million in 3Q15.

The company records revenue from electricity generated from its downstream solar power projects as an asset on its balance sheet. It recognizes this revenue when the projects are sold. When comparing the financial data of upstream solar (TAN) companies such as First Solar (FSLR), SunEdison (SUNEQ), SunPower (SPWR), Trina Solar, Yingli Solar (YGE), and Canadian Solar (CSIQ), it’s important to consider their revenue recognition models. The revenue recognition process may not be linear. As a result, reported sales can fluctuate greatly.

Next, let’s look at Trina Solar’s 3Q16 cost performance.

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