Q3 2012 Earnings Call
November 01, 2012 4:30 pm ET
Robert Okunski - Senior Director of Investor Relations
Thomas H. Werner - Chairman, Chief Executive Officer and President
Charles D. Boynton - Chief Financial Officer and Executive Vice President
Howard J. Wenger - President of Regions
Brandon Heiken - Crédit Suisse AG, Research Division
Christopher Blansett - JP Morgan Chase & Co, Research Division
Ahmar M. Zaman - Piper Jaffray Companies, Research Division
Previous Statements by SPWR
» SunPower Management Discusses Q2 2012 Results - Earnings Call Transcript
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Thank you, Ed. I would like to welcome everyone to our third quarter 2012 earnings conference call.
On the call today, we will start off with an operating view from Tom Werner, our CEO, followed by Chuck Boynton, our CFO, who will review our third quarter of 2012 financial results. Tom will then discuss our guidance for the balance of the year before opening up the call for questions. As a reminder, a replay of this call will be available later today on the Investor Relations page of our website.
During today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in our 2011 10-K, quarterly reports on Form 10-Q, as well as on today's press release. Please see those documents for additional information regarding those factors that may impact these forward-looking statements.
To enhance this call, we have also posted a set of PowerPoint slides, which we will reference during this call on the Events and Presentations page of our Investor Relations website. In the same location, we have posted a supplemental data sheet detailing some of our historical metrics.
On Slide 2 of our PowerPoint presentation, you will find our Safe Harbor statement. Our prepared remarks will run approximately 25 minutes and then we will have a brief question-and-answer session. With that, I'd like to turn the call over to Tom Werner, CEO of SunPower, who will begin on Slide 3. Tom?
Thomas H. Werner
Thanks, Bob and thank you for joining us today. On today's call, we will update you on our Q3 operational highlights and strategic position, review our third quarter financials and provide our outlook for the balance of the year. Overall, Q3 was a strong quarter. Against the backdrop of highly challenging industry conditions, we increased revenue in a number of key markets. SunPower's ability to add value both upstream and downstream enabled us to record our third sequential quarter of midteens gross margins and posted another non-GAAP profit for the quarter.
We also strengthened our balance sheet reducing inventory by more than $40 million and exiting Q3 with more than $375 million in cash.
Now let me provide some specific Q3 operational highlights.
Please turn to Slide 4.
SunPower's North American power plant business continues to perform very well, bragging strong revenue and margin contribution while providing long-term predictability and visibility. Execution on our 250-megawatt CVSR project for energy remains on track and we achieved an important milestone in September by connecting 22 megawatts to the grid.
To date, we have installed more than 150 megawatts of panels to CVSR.
We're also making significant progress on financing of our first 2 Southern California Edison Antelope Valley Solar projects totaling 600 megawatts.
We remain confident that we will add financing in place to meet our 2013 construction schedule.
These 2 projects provide us long-term financial visibility as both CVSR and ABS together will provide approximately 1/3 of our revenue each year for the next 3 years.
We also continued to build our pipeline of new power plant projects and recently executed a PPA and PG&E for the 100-megawatt Henrietta project in California. SunPower continues to win in the utility scale market as we bring a unique combination of quality in the field, technology and balance sheet for the PV power plant business.
In the North American Commercial business, we recently dedicated approximately 4 megawatts of systems for the Porterville school district in California, bringing our total megawatts installed in the Educational sector to more than 30.
In the North American Residential market, we were once again by far, the largest lease provider. For instance, in California SunPower Leases accounted for approximately 40% of all Residential PV lease applications in Q3.
According to the information from CSI. Over the past year, we have added approximately 13,000 lease customers bringing our total U.S. customer base to 60,000.
This growth has been driven by a combination of attractive customer economics and superior technology, both delivered through the industry's largest and most experienced independent dealer network.
Moving on to Europe, Middle East and Africa. European market continues to be challenging. And our performance was impacted by lower volumes in most key markets as well as declining ASPs.
Our goal is to regain profitability in this region and we are implementing a number of strategic initiatives that will enable us to achieve this goal next year.
I want to reiterate that we remain committed to the European market as a long-term fundamentals for solar are strong there. For example, in France, we are recently awarded 12 projects totaling 33 megawatts. We expect Germany, Italy and France to remain our core markets in Europe.