A Closer Look at 3Q15 Solar Earnings: SUNE, FSLR, and CSIQ
SunEdison’s cost structure
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SunEdison’s (SUNE) cost of goods sold fell to $365 million in 3Q15 from $428 million in 3Q14. The change in the company’s business model—to retain projects in order to drop them down to TerraForm Power (TERP) and TerraForm Global (GLBL)—was the main reason for fall in the cost of goods sold.
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However, general and administrative (or G&A) expenses more than offset the drop in the cost of goods sold. The company incurred substantially higher employee costs and operating costs related to acquisitions. The company reported G&A expenses of $296 million (62% of sales) in 3Q15 compared to $126 million (27% of sales) in 3Q14. The company said that the headcount addition to support growth caused the spike.
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SunEdison’s interest costs doubled to $214 million in 3Q15 against $107 million in 3Q15. The rise in interest costs was a result of increased debt levels. Leverage separates SunEdison from more prudent solar power companies (TAN) like FirstSolar (FSLR).
SunEdison’s losses
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SunEdison’s net losses from continuing operations—excluding the discontinued semiconductors division—came in at $331 million, or $0.92 a share, in 3Q15 compared to $238 million or $0.77 a share in 3Q14.
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Net losses came in at $284 million or $0.91 a share in 3Q15 compared to $283 million or $1.06 a share in 3Q14. As we discussed earlier, its net losses were far ahead of analysts’ expectation of $0.74 a share.
Let’s look at SUNE’s balance sheet position in the next part of this series.
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