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SolarCity in a Fog, Cloudier Days Ahead

Paul Ausick

SolarCity Corp. (SCTY) reported second quarter 2013 earnings after markets closed today. For the quarter, the solar PV installer posted an adjusted earnings per share (EPS) loss of $0.43 on revenues of $46.57 million. In the same period a year ago, the company reported an EPS loss of $2.37 on revenues of $37.95 million. Second-quarter results compare to the Thomson Reuters consensus estimates for an adjusted EPS loss of $0.38 and $27.44 million in revenues.

The GAAP loss for the second quarter totaled $0.31 and did not include $3.98 million in income from non-controlling interests.

The company’s outlook for the third quarter includes an adjusted EPS loss of $0.50 to $0.60. SolarCity expects to deploy 70 to 77 megawatts of new solar projects during the quarter, with a gross margin of 30% to 40%. Revenues from leasing are expected at $21 to $23 million and systems sales revenues are expected at $15 to $25 million. Operating expenses are pegged at $45 to $50 million.

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The leasing revenue forecast is slightly higher than the $20.6 million that SolarCity booked in the second quarter, and the anticipated sales revenue is sharply lower than the $35 million in the second quarter. And to add insult to injury, the operating expense forecast is much higher than the $35.61 million posted in the second quarter.

Prior to today’s results the consensus analysts’ estimate for the third quarter included an EPS loss of $0.38 on revenues of $41.24 million. SolarCity does not expect to hit either one.

We noted in our preview of SolarCity’s earnings earlier today that the company enjoys a halo effect from its association with Elon Musk, its chairman and the CEO of Tesla Motors Inc. (TSLA). Tesla posted another surprisingly solid quarter today, so the Musk glow is clearly not enough.

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Shares are down more than 8% in after-hours trading at $39.06 in a 52-week range of $9.20 to $52.77. The consensus target price for the shares was around $33.00 before today’s report.

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