All About SolarCity Corp (SCTY) Earnings


SolarCity Corp (NASDAQ:SCTY) is the top solar systems provider and boosted its spending in the second quarter to maintain its position. It was a mixed second quarter results from the company. However, the stock witnessed downside pressures since the adjusted loss per share was wider than the street analysts expected. There are also other takeaways from its earnings number.

Cash Flow

SolarCity Corp (NASDAQ:SCTY)’s available cash for the trailing twelve-month period was $114 million. It was generated from the contracts that normally run for two decades and is the basis of revenue source. The company signs long-term contracts with homeowners for power sales. The cash component assumed importance since the company does loans with the backing of these contracts to fund more installations.

One of the takeaways is that a 30% investment tax credit is given by the government now will drop to 10% for commercial projects from 2017. For homeowners paying cash for the solar panels, there will not be any tax credit after the end of the next year. However, solar trade companies are lobbying with the Congress for a renewal of the tax credit. The renewal would undoubtedly boost the demand for solar power.

Key Tactics

SolarCity Corp (NASDAQ:SCTY) appears to be adopting tactics that will cut down the costs of sales, as well as, installation. At the same time, the company’s strategy is to line up customers at a quick rate. Forbes said that if the company could deliver better returns to the financial institutions, which fund the solar panel installations, it will help its business grow even after the tax credit is taken away. During the conference call, the company’s CFO, Brad Buss, indicated that is their objective.

During the second quarter, the company’s total cost per watt fell 3% to $2.91 per watt. In respect of residential, the decline was 7%. The company recorded 395MW booking in the June quarter with $7.7 billion in nominal contract payments remaining. The value created was $196 million while cumulative portfolio grew to 1.4GW with the addition of 189 MW in the second quarter.

Outlook

SolarCity Corp (NASDAQ:SCTY) indicated that it is planning to install 260 MW of power in the third quarter following the ramp up in bookings in the second quarter. The installation will represent 89% YOY growth. The solar panel provider expects revenue of $80 – $86 million from the lease, as well as, incentive representing 59% YOY growth at the midpoint. Component sale and energy system is forecast to generate revenue of $26 – $28 million.

For the full year, SolarCity Corp (NASDAQ:SCTY) is planning to install 920 – 1000 MW power. The company indicated that it will provide future outlook based on installations rather than deployments.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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