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SolarCity reports $250 million quarterly loss, projects sales growth

Lyndon Rive is chief executive officer of SolarCity.
Rooftop solar giant SolarCity reported a $250-million second-quarter loss, but Lyndon Rive, the company’s chief executive officer, projects strong growth for the rest of 2016.
(Getty Images North America)

Rooftop solar giant SolarCity reported a wider loss of $250 million in the second quarter of this year, but the company projects greater sales growth in the second half of 2016.

SolarCity, which is being bought by Tesla Motors Inc., is seeking to transform itself as the rooftop solar market continues to develop by offering solar storage and new products, including a solar roof with panels integrated into the design.

Here’s the takeaway.

Rebounding from a weak 2016 start

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SolarCity’s loss of $250 million was almost $100 million more than the same period a year ago. The company reported a per-share loss of $2.32 compared with $1.61 in the year-earlier quarter.

Revenue for the quarter totaled $186 million, up 81% compared with the second quarter of 2015.

For the third quarter, SolarCity expects a loss of $2.55 to $2.66 per share.

After what the company saw as a weak first quarter, SolarCity said customer demand rebounded in the second quarter. Bookings increased 40% in the second quarter over the first quarter.

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Solar installations in the second quarter reached 201 megawatts but are projected to as much as double that amount in the fourth quarter.

“From a high level, I’m pretty excited about what we’re doing,” Lyndon Rive, SolarCity’s chief executive officer, said during a company earnings call Tuesday. “I’m expecting to increase dramatically in Q4.”

Loan program heating up

A significant driver of new sales is SolarCity’s new loan program that it announced in June.

Rive said 20% of the company’s bookings are coming through the loan program, which allows consumers to purchase solar panels through 10-year or 20-year loans from SolarCity. The consumer then owns the panels and receives the benefit of the 30% federal tax credit.

SolarCity popularized the solar leasing program, which allows consumers to acquire solar panels with no money up front. SolarCity still owns the panels and receives the federal tax benefit.

Other companies have “always had financing,” Rive said. “We’re releasing products that our competitors don’t have.”

New products coming

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SolarCity plans to launch two new products to help diversify its offerings. Details of the products remain under wraps, but one involves making the solar system more a part of the roof.

The new product is “not a thing on the roof,” Elon Musk, SolarCity’s chairman, said during the earnings call Tuesday. “It is the roof. This will be quite a standout. One of the things I’m really excited about.”

Added Rive: “Once we announce this product, I think it will actually increase the sales.”

Combining solar systems with storage is a large part of SolarCity’s focus going forward, Musk and Rive said during the earnings call.

SolarCity and Tesla merger

With Tesla’s ongoing acquisition of SolarCity, Rive and Musk, also Tesla’s chief executive officer, see an ability to cut costs dramatically.

Musk said the overlap between the two companies in computer systems and services, such as electricity storage, create opportunities to dramatically cut costs.

For instance, Rive said if the combined company reduces installation costs by 10 cents a watt, that savings would amount to $100 million.

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In addition, combining the two companies will help eliminate red tape from potential conflicts that arise because of the relationships and involvement of the executives in the two companies.

“This combination is about getting rid of the conflicts of interest,” Musk said.

Proposing more clean energy options

SolarCity currently operates in 19 states and expects soon to add a couple more. Meanwhile, Tesla’s operations span some 40 countries.

Musk said the combined operations of the two companies could increase the ability to bring solar panels with storage options to the countries where Tesla operates, helping to deliver more clean energy worldwide.

“What do we want the world to look like?” Musk asked. “Are we going there as fast as possible?

“Any rational person who believes in science thinks that its important for the world to transition to sustainable energy. It’s about trying to accelerate where we know we need to get to anyway  ... in a very big, macro-scale way.”


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