Solar City (SCTY) is set to report Q4 results today after the close with a conference call to follow at 5pm ET.
Current consensus stands at a loss of $2.59 per share on Revenue of $105.6 mln.
SCTY's stock has seen an aggressively wide range the last several years. It has traded down to multiyear support ahead of its report after trading near 40/share last quarter's report. It also was a stock approaching $60/share in December.
SCTY announced last earnings that it was switching from a growth tactic to cost cutting and cash flow.
SCTY projected it would be cash flow break even by the end of 2016 and it will be important to show that the co will be able to hit these targets. The 52-week low will set up as a key support for SCTY as it will have to deal with what is likely to be a hefty top line miss.
Guidance
Installations of 280 to 300 MW in the fourth quarter. This would represent year-over-year growth of 58%-69% and would translate into full-year 2015 installations of 878-898 MW. This is below the low end of prior annual guidance.
- Q4 2015 GAAP revenue guidance Operating Lease and Solar Energy Systems Incentive Revenue of $70-76 million, up 48% y/y; Solar Energy System and Component Sale Revenue is expected to range between $30-32 mln (Total Revenue guidance is $100-108 mln, Capital IQ consensus $117 mln).
- Operating Lease and Solar Energy Systems Incentive Gross Margin is expected to range between 30% - 32%.
- Non-GAAP Loss Per Share is expected to range between ($2.60)-($2.75), Capital IQ consensus ($2.15)
- FY2016 Guidance Introduction
- Co introduced preliminary 2016 guidance of 1.25 GW Installed, representing a y/y growth of ~41%.
- SCTY expects to announce meaningful reductions to 2017 cost targets by this earnings call.
- Expect to be cash flow break even by the end of 2016.
Q3 Recap
SCTY reported Q3 (Sep) loss of $0.20 per share, $1.74 better than the Capital IQ Consensus of ($1.94). Revenues rose 95.1% year/year to $113.85 mln vs the $111.43 mln Capital IQ Consensus.
Cost per Watt achieved a new record low of $2.84
- PowerCo Platform
- TTM Energy Production: 1.5 Terawatt-Hour (TWh), up 75% y/y
- Cumulative MW Installed: 1,674 MW, up 86% y/y
- Cumulative Customers: 298,030, up 77% y/y
- Estimated Nominal Contracted Payments Remaining: $8.9 billion, up 115% y/y
- Net Retained Value: $3.3 Billion, or ~$33 per basic share.
- DevCo
- Crossed Annualized Run Rate of 1 GW in Installations in 3Q
- MW Installed: Record 256 MW, up 86% y/y; residential up 69% y/y;
- MW Booked: 345 MW, up 50% y/y;
- Net Increase in Nominal Contracted Payments Remaining: $1.2 billion, up 47% y/y;
- DevCo Cost: $2.84 per Watt, down (2%) y/y;
- Unlevered IRR: 12% forecast from Q3 2015 installations based on all-in costs including SG&A
- Economic Value Creation: $239 Million forecast from our incremental Q3 2015 installations
BIAS: SELL
UPDATE
SolarCity beats by $2.63, beats on revs; guides Q1 EPS below consensus (26.35 -1.59)
- Reports Q4 (Dec) earnings of $0.04 per share, $2.63 better than the Capital IQ Consensus of ($2.59); revenues rose 60.8% year/year to $115.48 mln vs the $105.67 mln Capital IQ Consensus.
- MW Installed: Record 272 MW, up 54% year-over-year (Guidance 280-300 MW)
- MW Deployed: 253 MW, up 44% year-over-year
- Value of MW Deployed under Energy Contracts: $3.64 per watt at a 6% discount rate ($3.32 per watt contracted and $0.32 per watt estimated renewal)
- Cost per Watt: $2.71 per watt, down 5% year-over-year;
- Asset Financing in Q4 2015: $2.40 per watt.
- As of December 31, 2015, unrestricted Cash and Investments totaled $394 million, as compared to $418 million on September 30, 2015. The quarterly decline in cash of $137 million.
- Residential has consistently performed above expectations over the last year, and missed guidance largely on commercial installations.
- Going forward, plan on removing from guidance any large projects with construction deadlines late in the quarter
