SunEdison (SUNE) Posts Wider Q3 Loss on Higher Expenses
SunEdison Inc. SUNE posted dismal quarterly results once again. The company incurred a loss of 92 cents per share from continuing operations for third-quarter 2015, much wider than the year-ago quarter loss of 77 cents.
The year-over-year decline was mainly due to a significant increase in general and administration (G&A) as well as interest expenses resulting from higher debt burden.
The company also witnessed soft top-line performance with revenues increasing just 1.5% year over year to $476 million.
On the other hand, the company’s gross profit increased more than twofold to $111 million from $41 million a year ago. Gross margin improved to 23.3% from 8.7%.
Despite the significant rise in gross profit, SunEdison incurred loss mainly due to higher G&A expenses, and financing costs.
The company’s G&A expenses increased about 135% to $296 million. Moreover, interest expenses doubled to $214 million because of higher debt.
Therefore, the company posted loss from continuing operation of $287 million or 92 cents per share compared with a loss of $204 million or 77 cents posted in the third quarter of 2014.
SunEdison exited the quarter with cash and cash equivalents of $2.39 billion as against $1.29 billion in the previous quarter. Total debt (excluding current portion) increased to $9.77 billion from $9.17 billion at the end of second-quarter 2015. During the first three quarters of 2015, the company used $1.14 billion of cash for operational activities.
Conclusion
Although SunEdison reported dismal third-quarter results, strong energy sales were a positive.
We believe that the world’s leading renewable energy developer will benefit from the increase in demand for solar energy and the divestment of the semiconductor business, which will enable it to concentrate more on core competencies. Also, the company’s acquisitions and collaborations are likely to drive growth.
Though SunEdison’s growing exposure to the solar energy market is encouraging, project development requires considerable time and investment. Hence, any delay or inability in selling these projects at desired prices could affect liquidity.
Moreover, the pricing environment and a leveraged balance sheet remain the concerns for SunEdison. Competition from SunPower Corp. SPWR and First Solar Inc. FSLR further add to the woes.
Currently, SunEdison has a Zacks Rank #3 (Hold). Investors may also consider Ambarella Inc. AMBA, which carries a Zacks Rank #2 (Buy).
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