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Press release from GlobeNewswire (a Nasdaq OMX company)

SolarCity Announces First Quarter 2013 Financial Results

Monday, May 13, 2013

SolarCity Announces First Quarter 2013 Financial Results

13:21 EDT Monday, May 13, 2013

SAN MATEO, Calif., May 13, 2013 (GLOBE NEWSWIRE) -- SolarCity (Nasdaq:SCTY), a leading provider of clean energy, today announced financial results for the first quarter ended March 31, 2013.

"Extending its leadership as the nation's premier clean energy provider, SolarCity not only grew its customer base 106% year-over-year to over 57,400 and increased its long-term contracted cash flows to $1.22 billion but also exceeded guidance of MW deployed of 41 MW with 46 MW in the first quarter of 2013," said Lyndon Rive, CEO. "Through our unique, vertically-integrated platform of financing and installing solar systems, we offer customers a compelling value proposition of clean energy for lower than their local utility rate," continued Mr. Rive. "And our growing economies of scale and falling cost of capital are leading us to retain greater value for our shareholders."

Q1 2013 Operating Highlights

In its first full quarter as a publicly-traded company following its December 12, 2012 IPO, SolarCity continued to make progress in building out its distributed energy platform. Key operating and development highlights in the quarter include:

  • MWs Deployed were 46 MW, up 12% from the first quarter of 2012, and bringing cumulative MWs deployed to 333 MW. Residential MWs deployed increased 137% year-over-year
  • Customer Base reached a cumulative 57,416, growing 106% year-over-year (and 14% from the fourth quarter of 2012)
  • Energy Contracts signed and outstanding rose 16% from the fourth quarter of 2012 to 46,843

Estimated Nominal Contracted Payments and Retained Value

Due to the long-term nature of operating lease contracts—of up to 20 years—the Company believes GAAP income statement accounting does not accurately reflect new sales activity. It views the following operating metrics as a better representation of its business outlook (amounts as of December 31, 2012 are presented as corrected from amounts previously reported):

  • Estimated Nominal Contracted Payments Remaining of $1,222 million at March 31, 2013, up 10% from $1,109 million at December 31, 2012
  • Retained Value of $569 million at March 31, 2013, equating to retained value per watt of $1.25/W at March 31, 2013

"Retained Value" represents the forecasted net present value of estimated 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. Our calculation of retained value assumes a discount rate of 6%.

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 its Investing and Financing Activities include:

  • Investments in Solar Energy Systems of $138.2 million bringing the cumulative gross total to date to over $1.14 billion
  • Available Tax Equity Financing of 158 MW as of May 10, 2013

Q1 2013 GAAP Cash Flows

For the first quarter ended March 31, 2013, net cash provided by Operating Activities was $8.9 million, while net cash used in Investing Activities was $140.6 million and net cash provided by Financing Activities was $98.9 million. The net decrease in cash and cash equivalents for the quarter ended March 31, 2013 was $32.8 million.

Condensed GAAP Statements of Cash Flows

$ in thousands Three Months Ended:
Net Cash Provided By (Used In): Mar. 2012 Dec. 2012 Mar. 2013
Operating Activities (76,885)  64,723  8,898
Investing Activitites  (86,831)  (151,288)  (140,576)
Financing Activities (Before Equity Issuance)  122,658  104,548  98,378
       
Net Cash Provided (Used) before Equity Issuance  (41,058)  17,983  (33,300)
Net Cash Provided by Equity Issuance  81,255  92,779  514
       
Net Increase (Decrease) in Cash and Cash Equivalents  40,197  110,762  (32,786)

Q1 2013 GAAP Income Statement

For the first quarter of 2013, core Operating Lease Revenue was $15.1 million, rising 85% from $8.1 million in the first quarter of 2012. Total revenue grew 21% year-over-year to $30.0 million.

Gross Profit was $12.7 million, growing 25% year-over-year from $10.1 million in the first quarter of 2012 and yielding Gross Profit Margin of 42%. Total Operating Expenses were $34.5 million, rising from $24.7 million in the first quarter of 2012, as the Company continued to invest in its development capabilities. Loss from Operations was $21.8 million as compared to $14.6 million in the year-ago period.

Q2 2013 Guidance and Update to 2013 Outlook

For Q2 2013, the Company expects to deploy between 48 MW and 53 MW.

For its Q2 2013 GAAP income statement, the Company also expects:

  • GAAP Operating Lease Revenue : $16 million - $18 million
  • GAAP Solar Energy Systems Sale Revenue : $5 million - $10 million
  • GAAP Gross Margin : 40%-55%
  • GAAP Operating Expenses : $38 million - $42 million

For 2013, we continue to expect MWs deployed of 250 MW. In addition, we not only continue to expect to turn consistently net cash flow positive by Q4 2013 but we also now expect positive net cash flow in Q2 2013.

Earnings Conference Call

The Company will hold a conference call today to discuss its first 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 1-877-407-4018, or for international callers, 1-201-689-8471. A replay will be available one hour 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 412030. The replay will be available until May 20, 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 press release 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 deployment of megawatts (including megawatts currently in backlog), the amount of megawatts that can be deployed based on committed available financing, expected future GAAP income statement results, the timing of the Company becoming net cash flow positive, 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, risks that consumers who have executed energy contracts included in reported nominal contracted payments remaining and backlog may seek to cancel those contracts, 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 annual report on our Form 10-K, 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, March 31,
  2012 2013
  (audited) (unaudited)
Assets     
Current assets:     
Cash and cash equivalents   $ 160,080  $ 127,294
Restricted cash   7,516  3,154
Accounts receivable, net  25,145  19,041
Rebates receivable   17,501  16,294
Inventories   87,903  77,681
Deferred income tax asset  5,770  5,377
Prepaid expenses and other current assets   11,502  26,304
Total current assets   315,417  275,145
     
Restricted cash   2,810  2,513
Solar energy systems - net  1,002,184  1,131,119
Property, plant and equipment – net   18,635  19,793
Other assets  22,796  23,420
Total assets   $ 1,361,842  $ 1,451,990
     
Liabilities and equity     
Current liabilities:     
Accounts payable   $ 62,986  $ 57,525
Distributions payable to noncontrolling interests  12,028  19,435
Current portion of deferred U.S. Treasury grants income  11,376  13,684
Accrued and other current liabilities   52,334  36,395
Customer deposits   8,753  8,349
Current portion of deferred revenue   31,516  35,109
Current portion of long-term debt   20,613  14,211
Current portion of lease pass-through financing obligation  13,622  27,165
Current portion of sale leaseback financing obligation  389  491
Total current liabilities   213,617  212,364
     
Deferred revenue, net of current portion   204,396  234,907
Long-term debt, net of current portion   83,533  96,224
Long-term deferred tax liability  5,790  5,400
Lease passthrough financing obligation, net of current portion  125,884  101,168
Sale leaseback financing obligation, net of current portion  14,755  14,653
Deferred U.S. Treasury grants income, net of current portion  286,884  354,321
Other liabilities and deferred credits  112,056  118,560
Total liabilities   1,046,915  1,137,597
     
Stockholders' equity:     
Common stock 7 7
Additional paid-in capital   325,705  329,941
Accumulated deficit   (111,392)  (142,386)
Total stockholders' equity   214,320  187,562
Noncontrolling interests in subsidiaries  100,607  126,831
Total equity   314,927  314,393
Total liabilities and equity   $ 1,361,842  $ 1,451,990
     
SolarCity Corporation
Condensed Consolidated Statements of Operations
 
 
In Thousands, Except Share Par Values Three months ended 
  March 31, March 31,
  2012 2013
  (unaudited) (unaudited)
Revenue:     
Operating leases   $ 8,139  $ 15,089
Solar energy systems sales   16,702  14,899
Total revenues   24,841  29,988
     
Cost of revenue:     
Operating leases  2,582  5,503
Solar energy systems   12,125  11,789
Total cost of revenues   14,707  17,292
     
Gross profit  10,134  12,696
     
Operating expenses:     
Sales and marketing   16,131  17,879
General and administrative   8,562  16,618
Total operating expenses   24,693  34,497
     
Loss from operations   (14,559)  (21,801)
     
Interest expense, net  3,494  6,319
     
Other expense, net   8,974  140
     
Loss before income taxes  (27,027)  (28,260)
Income tax (provision) benefit   (35)  105
Net loss  (27,062)  (28,155)
Net (loss) income attributable to noncontrolling interests  (29,818)  2,839
Net income (loss) attributable to stockholders  $ 2,756  $ (30,994)
     
Net Income (Loss) Attributable to Common Stockholders    
Basic  $ 453  $ (30,994)
Diluted  $ 656  $ (30,994)
Net Income (Loss) per Share Attributable to Common Stockholders    
Basic  $ 0.04  $ (0.41)
Diluted  $ 0.04  $ (0.41)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders    
Basic 10,503,931 75,186,430
Diluted 17,076,717 75,186,430
 
     
SolarCity Corporation
Condensed Consolidated Statements of Cash Flows
     
  Three months ended
In Thousands March 31, March 31,
  2012 2013
  (Unaudited) (Unaudited)
Operating activities:    
Net loss  $ (27,062)  $ (28,155)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    
Depreciation and amortization net of amortization of deferred U.S. Treasury grant income  3,961  7,482
Interest on lease pass-thorough financing obligation  1,899  3,871
Stock-based compensation  2,091  3,722
Revaluation of convertible redeemable preferred stock warrants  8,588  –
Revaluation of preferred stock forward contract  350  –
Deferred income taxes  3  3
Reduction in lease pass-through financing obligation  (3,865)  (5,482)
Changes in operating assets and liabilities:    
Restricted cash  92  757
Accounts receivable  (25,150)  6,104
Rebates receivable  (2,941)  1,207
Inventories  (7,446)  10,222
Prepaid expenses and other current assets  2,223  (10,785)
Other assets  (2,374)  (624)
Accounts payable  (68,772)  (5,461)
Accrued and other liabilities  7,872  (7,663)
Customer deposits  (253)  (404)
Deferred revenue  33,899  34,104
Net cash provided by (used in) operating activities  (76,885)  8,898
Investing activities:    
Payments for the cost of solar energy systems, leased and to be leased  (83,465)  (138,221)
Purchase of property and equipment  (3,366)  (2,355)
Net cash used in investing activities  (86,831)  (140,576)
Financing activities:    
Investment fund financings and bank borrowings:    
Borrowings under long-term debt  57,570  15,435
Repayments of long-term debt  (427)  (9,729)
Borrowings under bank line of credit  19,418  –
Repayments of sale-leaseback financing obligation  (88)  –
Proceeds from lease pass-through financing obligation  59,155  4,631
Repayment of capital lease obligations  (5,481)  (833)
Proceeds from investment by noncontrolling interests in subsidiaries  3,469  74,578
Distributions paid to noncontrolling interest in a subsidiary  (37,829)  (43,786)
Proceeds from U.S. Treasury grants  26,871  58,082
Net cash provided by financing activites before equity issuances  122,658  98,378
Equity issuances:     
Proceeds from exercise of stock options  387  514
Proceeds from issuance of convertible redeemable preferred stock  80,868  –
Net cash provided by equity issuances   81,255  514
Net cash provided by financing activities  203,913  98,892
     
Net increase (decrease) in cash and cash equivalents  40,197  (32,786)
Cash and cash equivalents, beginning of period  50,471  160,080
Cash and cash equivalents, end of period  $ 90,668  $ 127,294
     
           
Operating Activity Metrics 2011 2012 Q1 2012 Q1 2013 Cumulative
MW Deployed (1) 72 157 41 46 333
MW Backlog as of May 8, 2013 (2)         195
New Customers (3) 9,034 30,950 8,299 6,884 57,416
New Energy Contracts Outstanding (4) 7,132 26,327 7,746 6,387 46,843
Estimated Nominal Contracted Payments Remaining -- $m (5) 486 1,109     1,222
           

"MW" or "megawatts" represents the DC nameplate megawatt production capacity.

(1) "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.

(2) "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.

(3) "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.

(4) "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.

(5) "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. The estimated nominal contracted payment remaining as of December 31, 2012 of $1.109 billion is presented as corrected from the $1.091 billion previously reported and included in our annual report on Form 10-K.

CONTACT: Investor Contact
Aaron Chew
investors@solarcity.com

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