Dive Brief:
- SolarCity this week told the U.S. Securities and Exchange Commission it could incur up to $5 million in restructuring costs, primarily in the form of employee severance packages, as the company shifts from a growth strategy towards a focus on profitability.
- In an earnings call earlier ths month, the largest solar installer in the country reduced its expectations for solar deployments to 170 MW this quarter, down from 201 MW installed in the second quarter.
- The company's CEO and co-founder, Lyndon Rive, has requested the company reduce his salary from $275,000 to $1, as has co-founder and CTO Peter Rive.
Dive Insight:
It's a rough time for solar industry executives—a week before the Rive brothers cut their own salaries to just a buck, SunPower CEO Tom Werner did the same thing as a part of his company's restructuring.
"It's a symbolic gesture, but it's appropriate," Raymond James analyst Pavel Molchanov told Reuters.
Tesla Motors recently struck a deal to buy SolarCity for $2.6 billion, leading to an increased focus on profitability, especially in light of the company's second quarter earnings. SolarCity had a net loss of $55 million in the second quarter, significantly more than a $22 million loss in the same quarter last year.
SolarCity's debt load from its reliance on net metering policies to fuel installation growth had earlier stoked some fears among Tesla shareholders regarding the deal with the EV company. SolarCity's restructuring move could allay some lingering worries over the company's profitability, especially in light of contentious policy battles over net metering.
According to SolarCity's SEC filing, this week it "adopted and began implementing initiatives to realign the company’s operating expenses to match the company’s reduced guidance for megawatts installed. The realignment is expected to be completed by the end of 2016."
SolarCity told regulators in its 8-K Form that it anticipates restructuring charges ranging from approximately $3 million to $5 million, "consisting primarily of severance benefits. A substantial portion of such charges are expected to be incurred in the second half of fiscal 2016."
