SunEdison has gone through a lot of changes in the past year, diversifying beyond solar power and into wind power through its
$2.4 billion acquisition of First Wind, and beyond being solely a developer of projects for others into owning its own projects through its
YieldCo, TerraForm Power.
On Wednesday,
SunEdison reported
fourth-quarter and fiscal year 2014 results that helped illustrate how
these shifts are affecting the company’s bottom line -- and laying the
groundwork for matching global demand for renewable energy.
SunEdison reported fourth quarter non-GAAP revenues of $625.5 million
and a net loss of $42.7 million, or 16 cents per share, compared to
revenues of $540 million and a net loss of $181.8 million, or 68 cents
per share, in the fourth quarter of 2013.
On a GAAP basis, the company reported fourth-quarter 2014 revenues of
$610.5 million and a net loss of $242.1 million, or 89 cents per share,
compared to fourth-quarter 2013 revenues of $681.2 million and a net
loss of $283.4 million, or $1.06 per share.
These results didn’t match analysts’ fourth-quarter targets of revenues
of $683.8 million and a loss of 32 cents per share, pushing SunEdison’s
share price down slightly in after-hours trading Wednesday. But shares
had regained those losses in early Thursday trading -- perhaps because
of the rosier picture painted by the company’s record-setting 2014
project growth, as well as its backlog and pipeline of projects.
SunEdison reported a record 1,048 megawatts of new projects in 2014, up
506 megawatts, or 94 percent, from the previous year. That included 783
megawatts of projects retained on its balance sheet through the spinout
of TerraForm this summer, and projects “dropped down” into that YieldCo
since then, SunEdison CFO Brian Wuebbels said in a Thursday morning
conference call. TerraForm Power reported fourth-quarter 2014 net sales
of $42.6 million, up from $4.5 million in the same quarter in 2013.
The YieldCo structure allows SunEdison to retain the ongoing income
from projects and attract investors looking for steady income and
dividends, rather than the revenues from projects developed and sold to
third parties. Other companies have set up YieldCos such as NRG Yield,
NextEra Energy Partners, Abengoa Yield, and TransAlta Renewables.
But SunEdison, unlike these other companies that have created their own
YieldCos, has not reported a profitable quarter on a GAAP basis since
2011. The company’s vertically integrated silicon and semiconductor
manufacturing and solar project development business model, created when
U.S. semiconductor manufacturer MEMC bought SunEdison in 2009, was hit
hard by ongoing price pressures, and the future worry of losing the U.S.
federal Investment Tax Credit (ITC) for solar projects in 2017.
SunEdison reported 467 megawatts of projects under construction at the
end of the fourth quarter, and a pipeline of 5.1 gigawatts, with 973
megawatts of gross additions in 2014. Here’s a breakdown of those
projects by geographic region and size, along with a chart that shows
the growth of projects retained on the company's balance sheet.
“As we continue to see the acceleration of our yield vehicles, you’re
going to see the plan to move further and further to retaining more
projects and selling fewer projects,” Wuebbels said.
SunEdison is still growing its utility-scale and distributed solar
business in North America, CEO Ahmad Chatila said in Thursday’s call.
Indeed, SunEdison has
quietly launched
a residential solar loan program called SolarOwn. At the same time, “We
continue our strong momentum in emerging markets,” and “we expect these
markets to outpace the overall markets in the coming years,” he said.
In particular, “when Europe went through its challenges, we refocused
our efforts on LatAm,” he said, using shorthand for Latin America, where
SunEdison has taken the lead in terms of operational capacity, according to GTM Research’s
Latin America PV Playbook. SunEdison has also submitted a confidential S-1 filing to create a second YieldCo, focusing on
emerging markets in Africa and Asia, he said.
As for First Wind,
it brought 1.6 gigawatts of pipeline and backlog to the company’s
fourth-quarter results, as well as an additional 1.6 gigawatts of
projects eligible for U.S. Production Tax Credits (PTC), Wuebbels said.
First Wind is also the 11th-largest solar PV developer in the U.S., with
a total of 468 megawatts in operation and in development, according to
GTM Research's
U.S. Utility PV Market Tracker.
SunEdison has also set up a warehouse facility, which combines $500
million in equity financing with $1 billion in long-term and revolving
debt, to finance construction of both wind and solar projects, Wuebbels
said. “This is only the first of several innovations we’re working on to
create additional sources of growth capital beyond capital markets
while continuing to drive down the cost of capital for our capital
business,” he said.
Fourth-quarter non-GAAP gross margins were 10.8 percent, down from the
third quarter’s 15.8 percent but up from the 4.9 percent gross margins
of the fourth quarter of 2013. As this chart indicates, the company’s
margins have been dragged down by the poor performance of its silicon
materials segment.

Other highlights of the quarter included:
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An average cost of solar installations of $2.97 per watt, on the high side of the company’s projections for the year
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Fourth-quarter capital expenditures of $47.8 million, of which $23.1
million was incurred in the semiconductor materials segment
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$158.9 million in capital expenses incurred to secure the wind
turbines expected to result in 1.6 gigawatts of PTC-eligible wind
projects
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$304.3 million spent on acquisitions