SunPower, which makes high-efficiency solar panels, continued its rapid expansion in the first quarter as revenue climbed to $142.3 million in the first quarter, while net income rose to $1.2 million.
When acquisition and other non-recurring costs (such as stock based compensation) are excluded, net income came to $23.3 million, or 29 cents a share. Gross margins, meanwhile, came in at 29 percent, in part because the average selling price of solar cells and panels rose three percent over the previous three months. Typically in most hardware industries, average selling prices decline.
The figures, which came out Thursday, beat expectations. The consensus revenue estimate was $130.8 million in revenue and 19 cents in earnings per share excluding acquisition costs. Dave Edwards of ThinkEquity Partners, who is relatively bullish on the company, expected revenue to come in at $132.6 million and earnings per share (excluding acquisition costs) to hit 19 cents. Edwards also believed gross margins would come in at 26 percent.
The company's growth in part derives from the booming demand in solar technology. Government mandates and projects, along with consumer demand, are boosting demand in Germany, California, and the Mediterranean.
SunPower, however, also has managed to come out with solar cells that can convert more sunlight into electricity than its competitors. Although the company is far smaller than giants like Sharp, SunPower is probably the most prominent U.S. solar manufacturer.
Last year, it released solar panels that can convert 22 percent of the sunlight that strikes them into electricity. Additionally, it has also worked to keep a lid on costs by moving manufacturing to the Philippines and signing long term silicon purchase agreements with suppliers. In the earnings release, the company said it has agreements in place with some of the top silicon suppliers to produce We have agreements in place for sufficient silicon supply to produce 110 megawatts of solar cells in 2007and 400 megawatts in 2009.
It is also trying to reduce the cost of installing solar panels. Installation can cost roughly 1/3 to 1/2 of a solar system. The company's goal is to reduce the cost of a solar system, which can run about $30,000 before rebates in California, by half by 2012.