SolarCity (Nasdaq:SCTY), a leading provider of clean energy, today
announced financial results for the second quarter ended June 30,
2013.
"SolarCity delivered solid growth in its operating lease
business in the second quarter, with cumulative customers,
cumulative energy contracts, and estimated nominal contracted
payments all close to doubling from the end of Q2 2012, while the
momentum continued with a record month in residential bookings and
deployments in July," said Lyndon Rive, CEO. "Plus, Residential MWs
deployed rose 144% Y/Y to drive total MW deployments to the highest
quarterly rate yet at 53 MW," continued Mr. Rive. "With positive
net cash flow of $19.4 million (before options/warrant exercise)
and estimated nominal contracted payments remaining rising to $1.4
billion, we are building a solid platform for steady, visible cash
flow in the decades ahead."
Q2 2013 Operating Highlights
In the second quarter of 2013, SolarCity continued to make
progress in building out its platform for delivering cleaner and
cheaper distributed energy. Key operating and development
highlights in the quarter include:
- MWs Deployed reached a new quarterly record of
53 MW as residential MWs deployed grew 144% year-over year to 43
MW. Cumulative total MWs deployed stood at 387 MW as of June 30,
2013.
- MWs Booked totaled 69 MW.
- Cumulative Energy Contracts signed and
outstanding increased 105% over the prior twelve months (and 17%
since the first quarter of 2013) to 54,650.
- Cumulative Customers grew to 64,411, up 97%
over the prior twelve months (and 15% since the first quarter of
2013).
Estimated Nominal Contracted Payments and Retained
Value
Due to the long-term nature of its operating lease contracts—of
up to 20 years—and the related GAAP accounting for such contracts,
the Company views the following operating metrics as a better
representation of its new sales activity and business outlook:
- Estimated Nominal Contracted Payments
Remaining of $1,409 million at June 30, 2013, up 15% from
$1,222 million at March 31, 2013.
- Retained Value forecast of $662 million at
June 30, 2013, equating to retained value per watt forecast of
$1.27/W at June 30, 2013.
Investing and Financing Activities
With each new Energy Contract, SolarCity creates a recurring,
predictable cash flow stream. Its financial strategy is to maximize
retained value for shareholders by covering Investing Activities
with cash generated from Operating and Financing Activities.
Its Investing Activities are primarily comprised of the capital
investment in distributed generation solar energy systems under
long-term Energy Contracts with customers, while its Financing
Activities represent the funding of its solar energy systems
investments through its investor partners and lenders. Key
highlights of SolarCity's Investing and Financing Activities
include:
- Investments in Solar Energy Systems, Leased and to Be
Leased, of $158.0 million bringing the cumulative total
through the first six months of 2013 to $296.3 million
- Undeployed Tax Equity Financing Capacity of
169 MW as of August 1, 2013
Q2 2013 GAAP Cash Flows
For the second quarter ended June 30, 2013, net cash provided by
Operating Activities was $74.0 million, while net cash used in
Investing Activities was $159.6 million and net cash provided by
Financing Activities (before the exercise of stock options and
common stock warrants) was $105.0 million.
Defined as Operating Cash Flows plus Financing Cash Flows net of
Investing Cash Flows (excluding equity issuance) net cash flow of
$19.4 million was generated in the quarter ended June 30, 2013.
Cash and cash equivalents totaled $159.6 million as of June 30,
2013.
Condensed Statement
of Cash Flows |
$ in thousands |
Three Months
Ended: |
Net Cash Provided (Used)
In: |
June 30, 2012 |
March 31, 2013 |
June 30, 2013 |
|
|
|
|
Operating activities |
$38,421 |
$8,898 |
$74,039 |
Investing activities |
($93,691) |
($140,576) |
($159,571) |
Financing activities (before stock
options/warrants exercise) |
$25,571 |
$98,378 |
$104,978 |
|
|
|
|
Net cash provided (used) before stock
options/warrants exercise |
($29,699) |
($33,300) |
$19,446 |
Net cash provided by exercise of stock
options/warrants |
$810 |
$514 |
$12,866 |
|
|
|
|
Net increase (decrease) in cash
and cash equivalents |
($28,889) |
($32,786) |
$32,312 |
Q2 2013 GAAP Operating Income Statement
For the second quarter of 2013, Operating Lease revenue was
$20.6 million, rising 79% from $11.5 million in the second
quarter of 2012. Total revenue decreased (19%) year-over-year to
$37.9 million due to a decline in Solar Energy Systems Sales
revenue. The Company expects Solar Energy Systems sales revenue to
fluctuate more widely than Operating Lease revenue from period to
period given timing of revenue recognition.
Gross Profit was $15.5 million, growing 41% year-over-year from
$11.0 million in the second quarter of 2012 and yielding Gross
Profit Margin of 41%. Operating Lease gross margin was 65%.
Total Operating Expenses were $42.5 million, rising from
$26.5 million in the second quarter of 2012, largely owing to
higher employee compensation expenses and professional services
fees. Loss from Operations was $27.0 million as compared to
$15.5 million in the year-ago period. GAAP loss per share was
($0.31).
Non-GAAP Earnings per Share [EPS] Before Noncontrolling
Interests
Beginning with this second quarter 2013 earnings report and
subsequently on a go-forward basis, the Company will be
highlighting non-GAAP earnings per share based on Earnings Before
Net Income (Loss) Attributable to Noncontrolling Interests per
Share.
Under GAAP accounting, the Company reports net income (loss)
attributable to noncontrolling interests to reflect the Company's
joint venture fund investors' allocable share in the results of the
Company's joint venture financing funds. Income (loss) attributable
to noncontrolling interests is calculated based primarily on the
hypothetical liquidation at book value, or HLBV method, which
assumes that the joint venture funds are liquidated at the
reporting date, even though liquidation may or may not ever occur.
Additionally the returns that will be allocated to the investors
over the expected terms of the funds may differ significantly from
the amounts calculated under the HLBV method. Accordingly, the
Company will also report non-GAAP EPS based on earnings before net
income (loss) attributable to noncontrolling interests per share,
which it views as a better measure of its operating
performance.
While GAAP EPS is based upon net income (loss) attributable to
common stockholders, non-GAAP EPS is based upon net income (loss)
with the only difference between GAAP EPS and non-GAAP EPS being
net income (loss) attributable to non-controlling interests.
Under this definition, the Company reported second quarter 2013
non-GAAP earnings before noncontrolling interests per share of
($0.43). See below for a reconciliation of GAAP EPS to non-GAAP
EPS.
Guidance for Q3 2013 and Update to 2013
Outlook
For Q3 2013, the Company expects to deploy between 70 MW and 77
MW.
For Q3 2013, the Company also expects:
- GAAP Operating Lease Revenue:
$21 million - $23 million
- GAAP Solar Energy Systems Sale
Revenue: $15 million - $25 million
- GAAP Gross Margin:
30%-40%
- GAAP Operating Expenses: $45
million - $50 million
- Non-GAAP EPS (before Income (Loss) Attributable to
Noncontrolling Interests): ($0.50) – ($0.60)
The Company will not be providing GAAP EPS guidance.
For 2013, the Company reaffirms its guidance for MWs deployed of
270 MW, which it raised from 250 MW in June 2013. In addition, the
Company continues to expect to turn consistently net cash flow
positive on a go-forward basis by Q4 2013.
Earnings Conference Call
The Company will hold a conference call today to discuss its
second quarter results and its outlook for the remainder of 2013 at
5:00 pm Eastern. A live webcast of the call may be accessed over
the Internet from the Company's Investor Relations website at
http://investors.solarcity.com.
Participants should follow the instructions provided on the
website to download and install the necessary audio applications.
In addition, an earnings related presentation will be available on
the Company's Investor Relations site at 5:00 pm Eastern. The
conference call can be accessed live over the phone by dialing
1-877-407-0784, or for international callers, 1-201-689-8560. A
replay will be available two hours after the call and can be
accessed by dialing 1-877-870-5176, or for international callers,
1-858-384-5517. The passcode for the live call and the replay is
418284. The replay will be available until August 14, 2013.
About SolarCity
SolarCity® (Nasdaq:SCTY) provides clean energy. The company has
disrupted the century-old energy industry by providing renewable
electricity directly to homeowners, businesses and government
organizations for less than they spend on utility bills. SolarCity
gives customers control of their energy costs to protect them from
rising rates. The company offers solar power, energy efficiency and
electric vehicle services, and makes clean energy easy by taking
care of everything from design and permitting to monitoring and
maintenance. SolarCity currently serves 14 states and signs a new
customer every five minutes. Visit the company online at
www.solarcity.com and follow the company on Facebook &
Twitter.
Forward Looking Statements
This presentation contains forward-looking statements that
involve risks and uncertainties, including statements regarding
SolarCity's customer and market growth opportunities, financial
strategies for cash generation and increasing shareholder value,
the timing and amount of deployment of megawatts (including
megawatts currently in backlog), the retained value under energy
contracts and of contract renewals, the amount of megawatts that
can be deployed based on committed available financing, forecasted
cash flow in 2013, expected future GAAP and non-GAAP income
statement results, additional financial and operational forecasts
to be discussed during the conference call referenced in this
release, and assumptions relating to the foregoing.
Forward-looking statements should not be read as a guarantee of
future performance or results, and will not necessarily be accurate
indications of the times at, or by, which such performance or
results will be achieved, if at all. Forward-looking statements are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
or suggested by the forward-looking statements, including the
effect of electric utility industry regulations, net metering and
related policies, the availability and amount of rebates, tax
credits and other financial incentives, the availability and amount
of financing from fund investors, the retail price of
utility-generated electricity or the availability of alternative
energy sources, risks associated with SolarCity's rapid growth,
consumer default rates, higher-than-anticipated operations,
maintenance, insurance, administrative, and inverter costs,
assumptions related to available financing, risks that consumers
who have executed energy contracts included in reported nominal
contracted payments remaining, retained value, and MW booked, may
seek to cancel those contracts, assumptions as to retained value
under energy contracts and contract renewal rates and terms,
including applicable net present values, performance-based
incentives, and other rebates, credits and expenses, SolarCity's
limited operating history, particularly as a new public company,
changes in strategic planning decisions by management or
reallocation of internal resources, and general market, political,
economic and business conditions. You should read the section
entitled "Risk Factors" in our Quarterly Report on Form 10-Q, which
has been filed with the Securities and Exchange Commission and
identifies certain of these and additional risks and uncertainties.
We do not undertake any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
SolarCity
Corporation |
Condensed Consolidated
Balance Sheets |
|
|
|
(In Thousands) |
December 31, |
June 30, |
|
2012 |
2013 |
|
(audited) |
(unaudited) |
Assets |
|
|
Current
assets: |
|
|
Cash and cash equivalents |
$ 160,080 |
$ 159,606 |
Restricted cash |
7,516 |
6,031 |
Accounts receivable, net |
25,145 |
23,988 |
Rebates receivable |
17,501 |
20,235 |
Inventories |
87,903 |
68,735 |
Deferred income tax asset |
5,770 |
5,377 |
Prepaid expenses and other current
assets |
11,502 |
25,831 |
Total current
assets |
315,417 |
309,803 |
|
|
|
Restricted cash |
2,810 |
1,984 |
Solar energy systems – net |
1,002,184 |
1,278,880 |
Property, plant and equipment –
net |
18,635 |
19,862 |
Other assets |
22,796 |
27,675 |
Total assets |
$ 1,361,842 |
$ 1,638,204 |
|
|
|
Liabilities and
equity |
|
|
Current
liabilities: |
|
|
Accounts payable |
$ 62,986 |
$ 77,705 |
Distributions payable to noncontrolling
interests |
12,028 |
26,935 |
Current portion of deferred U.S. Treasury
grants income |
11,376 |
14,809 |
Accrued and other current
liabilities |
52,334 |
43,743 |
Customer deposits |
8,753 |
7,818 |
Current portion of deferred
revenue |
31,516 |
37,949 |
Current portion of long-term
debt |
20,613 |
8,702 |
Current portion of lease pass-through
financing obligation |
13,622 |
27,939 |
Current portion of sale leaseback
financing obligation |
389 |
403 |
Total current
liabilities |
213,617 |
246,003 |
|
|
|
Deferred revenue, net of current
portion |
204,396 |
277,827 |
Long-term debt, net of current
portion |
83,533 |
115,213 |
Long-term deferred tax liability |
5,790 |
5,400 |
Lease passthrough financing obligation,
net of current portion |
125,884 |
104,662 |
Sale leaseback financing obligation, net
of current portion |
14,755 |
14,550 |
Deferred U.S. Treasury grants income, net
of current portion |
286,884 |
393,268 |
Other liabilities |
112,056 |
149,854 |
Total
liabilities |
1,046,915 |
1,306,777 |
|
|
|
Stockholders' equity: |
|
|
Common stock |
7 |
7 |
Additional paid-in capital |
325,705 |
348,081 |
Accumulated deficit |
(111,392) |
(166,271) |
Total stockholders'
equity |
214,320 |
181,817 |
Noncontrolling interests in
subsidiaries |
100,607 |
149,610 |
Total equity |
314,927 |
331,427 |
Total liabilities and
equity |
$ 1,361,842 |
$ 1,638,204 |
|
SolarCity
Corporation |
Condensed Consolidated
Statements of Operations |
|
|
|
(In Thousands, Except Share and Per Share
Amounts) |
Three Months
Ended |
|
June 30, 2012 |
June 30, 2013 |
|
(unaudited) |
(unaudited) |
Revenue: |
|
|
Operating leases |
$ 11,528 |
$ 20,608 |
Solar energy systems sales |
35,046 |
17,341 |
Total revenue |
46,574 |
37,949 |
|
|
|
Cost of revenue: |
|
|
Operating leases |
3,710 |
7,223 |
Solar energy systems sales |
31,899 |
15,247 |
Total cost of revenue |
35,609 |
22,470 |
|
|
|
Gross profit |
10,965 |
15,479 |
|
|
|
Operating
expenses: |
|
|
Sales and marketing |
15,700 |
21,344 |
General and administrative |
10,788 |
21,176 |
Total operating
expenses |
26,488 |
42,520 |
|
|
|
Loss from
operations |
(15,523) |
(27,041) |
|
|
|
Interest expense, net |
4,841 |
5,421 |
Other expense, net |
1,455 |
162 |
Loss before income taxes |
(21,819) |
(32,624) |
Income tax provision |
(30) |
(25) |
Net loss |
(21,849) |
(32,649) |
Net income (loss) attributable to
noncontrolling interests |
3,984 |
(8,764) |
Net loss attributable to
stockholders |
$ (25,833) |
$ (23,885) |
|
|
|
Net loss per share attributable to common
stockholders: |
|
|
Basic |
$ (2.37) |
$ (0.31) |
Diluted |
$ (2.37) |
$ (0.31) |
|
|
|
Weighted average shares used to
compute net loss per share attributable to common
stockholders: |
|
Basic |
10,897,198 |
76,529,698 |
Diluted |
10,897,198 |
76,529,698 |
|
SolarCity
Corporation |
Condensed Consolidated
Statements of Cash Flows |
|
|
|
|
Six months
ended |
(In Thousands) |
June 30, |
June 30, |
|
2012 |
2013 |
|
(Unaudited) |
Operating activities: |
|
|
Net loss |
$ (48,911) |
$ (60,804) |
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities: |
|
|
Loss on disposal of property, plant and
equipment |
10 |
– |
Depreciation and amortization net of
amortization of deferred U.S. Treasury grant income |
9,021 |
15,989 |
Interest on lease pass-thorough financing
obligation |
4,939 |
6,869 |
Stock-based compensation |
4,713 |
8,996 |
Revaluation of convertible redeemable
preferred stock warrants |
9,557 |
– |
Revaluation of preferred stock forward
contract |
350 |
– |
Deferred income taxes |
6 |
3 |
Reduction in lease pass-through financing
obligation |
(7,290) |
(14,239) |
Changes in operating assets and
liabilities: |
|
|
Restricted cash |
(381) |
(1,591) |
Accounts receivable |
(16,396) |
1,157 |
Rebates receivable |
652 |
(2,734) |
Inventories |
2,153 |
19,168 |
Prepaid expenses and other current
assets |
(2,941) |
(12,717) |
Other assets |
(5,132) |
(2,190) |
Accounts payable |
(68,075) |
14,719 |
Accrued and other liabilities |
21,744 |
31,382 |
Customer deposits |
(5,025) |
(935) |
Deferred revenue |
62,542 |
79,864 |
Net cash provided by (used in)
operating activities |
(38,464) |
82,937 |
Investing activities: |
|
|
Payments for the cost of solar energy
systems, leased and to be leased |
(174,552) |
(296,254) |
Purchase of property and equipment |
(5,970) |
(3,893) |
Net cash used in investing
activities |
(180,522) |
(300,147) |
|
|
|
Financing activities: |
|
|
Investment fund financings and bank
borrowings: |
|
|
Borrowings under long-term debt |
60,532 |
34,464 |
Repayments of long-term debt |
(18,127) |
(18,616) |
Borrowings under bank line of credit |
19,418 |
– |
Repayments of sale-leaseback financing
obligation |
(178) |
(191) |
Proceeds from lease pass-through financing
obligation |
123,593 |
20,592 |
Repayment of capital lease obligations |
(15,582) |
(1,212) |
Proceeds from investment by noncontrolling
interests in subsidiaries |
21,795 |
146,071 |
Distributions paid to noncontrolling interest
in a subsidiary |
(91,298) |
(76,236) |
Proceeds from U.S. Treasury grants |
48,076 |
98,484 |
Net cash provided by financing
activities before equity issuances |
148,229 |
203,356 |
Equity issuances: |
|
|
Proceeds from exercise of stock options |
1,197 |
5,346 |
Proceeds from the exercise of convertible
redeemable preferred stock |
80,868 |
– |
Proceeds from exercise of common stock
warrants |
– |
8,034 |
Net cash provided by equity
issuances |
82,065 |
13,380 |
Net cash provided by financing
activities |
230,294 |
216,736 |
|
|
|
Net increase in cash and cash
equivalents |
11,308 |
(474) |
Cash and cash equivalents, beginning of
period |
50,471 |
160,080 |
Cash and cash equivalents, end of
period |
$ 61,779 |
$ 159,606 |
|
|
|
|
Reconciliation from GAAP EPS to
Non-GAAP EPS: |
|
|
|
|
|
GAAP Net Loss |
GAAP Net Loss |
Non-GAAP Net Loss |
|
Attributable to |
Attributable to |
Before
Noncontrolling |
in thousands except per share |
Stockholders |
Noncontrolling
Interests |
Interests |
Net loss |
($23,885) |
($8,764) |
($32,649) |
|
|
|
|
/ Weighted Average Common Shares
Outstanding |
76,530 |
76,530 |
76,530 |
|
|
|
|
= Net Loss Per Share |
($0.31) |
($0.11) |
($0.43) |
|
|
Operating Activity
Metrics: |
|
Q2 2012 |
Q1 2013 |
Q2 2013 |
Cumulative |
MW Deployed |
31 |
46 |
53 |
387 |
New Customers |
5,200 |
8,773 |
8,559 |
64,411 |
New Energy Contracts Outstanding |
4,760 |
7,363 |
8,087 |
54,650 |
Estimated Nominal Contracted Payments
Remaining -- $m |
|
|
|
$1,409 |
|
|
|
|
|
|
"MW" or "megawatts" represents the DC
nameplate megawatt production capacity. |
"Backlog" represents the aggregate
megawatt capacity of solar energy systems not yet deployed as of
the date specified pursuant to Energy Contracts and contracts for
solar energy system direct sales executed as of such date. |
"Customers" includes all residential,
commercial and government buildings where we have installed or
contracted to install a solar energy system, or performed or
contracted to perform an energy efficiency evaluation or other
energy efficiency services. |
"Energy Contracts" includes all
residential, commercial and government leases and power purchase
agreements pursuant to which consumers use or will use energy
generated by a solar energy system that we have installed or
contracted to install. For landlord-tenant structures in which we
contract with the landlord or development company, we include each
residence as an individual contract. For commercial customers with
multiple locations, each location is deemed a contract if we
maintain a separate contract for that location. |
"MW Booked" represents the aggregate
megawatt production capacity of solar energy systems pursuant to
customer contracts signed during the applicable period net of
cancellations during the applicable period. This metric includes
solar energy systems booked under Energy Contracts as well as solar
energy system direct sales. |
"MW Deployed" represents the megawatt
production capacity of solar energy systems that have had all
required building department inspections completed during the
applicable period. This metric includes solar energy systems
deployed under Energy Contracts as well as solar energy system
direct sales. |
"Nominal Contracted Payments Remaining"
equals the sum of cash payments obligated to be paid to us under
our Energy Contracts over the remaining term of such contracts.
This metric includes Energy Contracts for solar energy systems
already deployed and in Backlog. As an example, if a customer is 2
years into her 20 year contract, then 18 years of contract payments
remain. As an additional example, if a customer chose to pre-pay
her Energy Contract, then it is included in Nominal Contracted
Payments Remaining only while it is in Backlog as the pre-payment
has not been received. Payments for direct sales are not
included. |
"Retained Value" forecast represents
the sum of both "Retained Value under Energy Contract" and
"Retained Value Renewal." Retained Value Under Energy Contract
represents the forecasted net present value of Nominal Contracted
Payments Remaining and estimated performance-based incentives
allocated to us, net of amounts we are obligated to distribute to
our fund investors, upfront rebates, depreciation, renewable energy
certificates, solar renewable energy certificates and estimated
operations and maintenance, insurance, administrative and inverter
replacement costs. This metric includes Energy Contracts for
solar energy systems deployed and in Backlog. Retained Value
of Renewal represents the forecasted net present value of the
payments SolarCity would receive upon Energy Contract renewal
through a total term of 30 years, assuming all Energy Contracts are
renewed at a rate equal to 90% of the contractual rate in effect at
expiration of the initial term. This metric is net of
estimated operations and maintenance, insurance, administrative and
inverter replacement costs and includes Energy Contracts for solar
energy systems deployed and in Backlog. Our calculation of retained
value assumes a discount rate of 6%. |
"Retained Value per Watt" is computed
by dividing cumulative retained value as of such date by a sum
of total MWs deployed under Energy Contracts as of such date plus
MWs booked under Energy Contracts as of such date but not yet
deployed. |
"Undeployed Tax Equity Financing
Capacity" represents a forecast of the amount of MW that can be
deployed based on committed available tax equity financing for
Energy Contracts. |
CONTACT: Investor Contact
Aaron Chew
investors@solarcity.com
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