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SunPower Reports Second Quarter 2022 Results

02 August 2022
  • Added a record 19,700 customers in the second quarter, a 51% increase YoY
  • Accelerated revenue growth to 63% YoY
  • Achieved backlog of 53,000 retrofit and new homes customers
  • Delivered strong gross margin: 20% GAAP, 21% non-GAAP
  • Announced strategic relationship with IKEA U.S. to reach new customers and simplify the solar buying experience

SunPower Corp. (NASDAQ:SPWR), a leading solar technology and energy services provider, today announced financial results for the second quarter, ending July 3, 2022.

"There is a ubiquitous need for reliable electricity at an affordable price that isn't being met with our traditional energy sources," said Peter Faricy, SunPower CEO. "With our strategic growth plan, investment in world-class customer experience and robust pipeline, SunPower is well positioned to capture the strong resulting demand for solar and storage. This quarter we added a record number of customers, including an all-time high for new homes installs, and accumulated a backlog that we expect to set us up for high growth in the second half of the year."

SECOND QUARTER BUSINESS HIGHLIGHTS

SunPower continues to execute across its five strategic pillars to capture demand and cement its leadership position as the company delivering the most innovative ecosystem of home energy products with unmatched customer experience.

World-class customer experience

1.

Highest rated solar company: In the second quarter of 2022, SunPower remained the only 4+ star rated solar provider in the U.S. with an average review score of 4.3. SunPower's Net Promoter Score improved to 51, a 38% improvement year-over-year (YoY).

   

2.

Improved time to resolution: The company continued its trend of significantly improving customer response speed. In the last quarter, it minimized wait times to 31 seconds, a 45% improvement YoY, and shortened the average time it takes to resolve a customer query by 36% YoY.

 

Best, most affordable products

3.

Significant progress on ground-breaking panel: SunPower and First Solar (NASDAQ: FSLR) are finalizing negotiations to develop the world's most-advanced residential solar panels. The companies have agreed on the majority of key terms and are working toward definitive agreements. They are expected to sign a deal in the next quarter and promptly move forward to operationalize production.

   

4.

Increasing panel supply: SunPower secured additional product volume under their agreement with Maxeon Solar Technologies (NASDAQ: MAXN) for increased panel supply through the end of the year. Along with additional supply chain agreements, this further ensures the company's ability to meet unprecedented demand.

 

Growth

5.

Joining forces with IKEA U.S.: In May, SunPower announced a new strategic relationship with IKEA U.S. to introduce solar and storage to a new consumer market and make renewable energy easier to access. Through the collaboration, SunPower home energy products will be featured in select IKEA stores, and members of IKEA's customer loyalty program will be able to initiate their solar journey from the showroom floor. Home Solar with IKEA is expected to launch in select California markets in Fall 2022. 

   

6.

Driving growth in new homes: SunPower continues to stand out as an industry leader in new homes. It recorded a 46% increase YoY for contracted active solar-standard communities, with previously sold backlog growing to 34,0001 customers. This quarter, the company further expanded its category presence across the country: it solidified a multiyear national contract extension with KB Home (NYSE: KBH) and finalized a deal with Dream Finders Homes (NASDAQ: DFH) to build nearly 400 solar-standard homes across five communities in Colorado.

 

Digital innovation

7.

Completed significant monitoring upgrade: SunPower finalized a multiyear project to redesign its monitoring systems for a superior customer experience. The new system enables faster load times and activates features such as panel-level monitoring and alerts for customers and dealers. With the implementation, SunPower reduced maximum delay time between when panels measure power production and when that data is visible in the mySunPower app from one hour to less than two minutes. The new monitoring system is expected to save SunPower more than $4 million in annual operating costs by gaining efficiency and reducing third party vendor fees.

   

World-class financial solutions

8.

Grew financing product portfolio: SunPower Financial introduced several new offerings in the second quarter to help keep customers' monthly payments low, including low-APR loans and expanded eligibility up to $150,000.

 

1Backlog calculated as of July 22, 2022.

In June, SunPower closed the sale of its Commercial & Industrial Solutions (CIS) business to TotalEnergies. Additionally in the second quarter, TotalEnergies and Global Infrastructure Partners (GIP) signed a deal where GIP is expected to acquire an approximate 50% interest in a new joint venture that will hold TotalEnergies' 51% ownership in SunPower Corporation.

"This agreement is a strong signal from energy leaders and investors that accelerating the energy transition is an imperative and a powerful vote of confidence that SunPower is well suited to play a leading role in that change," said Faricy. 

Financial Highlights

($ Millions, except percentages, residential
customers, and per-share data)

2nd Quarter 2022

1st Quarter 2022

2nd Quarter 2021

GAAP revenue from continuing operations

$417.8

$350.3

$260.8

GAAP gross margin from continuing operations

19.5 %

20.6 %

23.3 %

GAAP net income (loss) from continuing operations

$(42.5)

$(2.2)

$87.1

GAAP net income (loss) from continuing operations
per diluted share

$(0.24)

$(0.01)

$0.46

Non-GAAP revenue from continuing operations1

$414.1

$336.1

$254.1

Non-GAAP gross margin from continuing operations1

21.3 %

21.7 %

22.5 %

Non-GAAP net income (loss) from continuing operations1

$5.2

$2.9

$12.1

Non-GAAP net income (loss) from continuing
operations per diluted share1

$0.03

$0.02

$0.07

Adjusted EBITDA1

$15.2

$11.2

$22.4

Residential customers

463,600

443,800

363,000

Cash2

$206.4

$142.3

$209.8

 

The sale of our C&I Solutions business met the criteria for classification as "discontinued operations" in accordance with the guidance in ASC 205-20, Discontinued Operations, beginning the first quarter of fiscal 2022. For all periods presented, the financial results of C&I Solutions are excluded in the table above.

 

1Information about SunPower's use of non-GAAP financial information, including a reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP Financial Measures" below.

 

2Includes cash and cash equivalents, excluding restricted cash

2022 Financial Outlook
SunPower affirmed prior 2022 guidance of $2,000-$2,400 Adjusted EBITDA per customer and 73,000-80,000 incremental customers, resulting in $90-$110 million Adjusted EBITDA for the year.

Earnings Conference Call Information

SunPower will discuss its second quarter, 2022 financial results on Tuesday, August 2 at 8:30 a.m. Eastern Time. The conference call can be accessed live by registering at https://register.vevent.com/register/BI8045a492c8dd47d6be8faf25537fcfbd. The live audio webcast and supplemental financial information will be available on SunPower's investor website at http://investors.sunpower.com/events.cfm.

About SunPower 
SunPower (NASDAQ:SPWR) is a leading solar technology and energy services provider in North America. SunPower offers the only solar + storage solution designed and warranted by one company that gives customers control over electricity consumption and resiliency during power outages. For more information, visit www.sunpower.com.

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) expectations regarding demand and our future performance based on backlog, bookings, projected consumer demand, and pipelines in our sales channels and for our products, and our ability to meet consumer demand; (b) our plans and expectations with respect to our strategic partnerships and initiatives, including our proposed partnership with First Solar, our strategic relationship with IKEA, and our agreements with KB Home and Dream Finders Homes, and the anticipated business and financial impacts thereof; (c) our strategic plans and areas of investment and focus, both current and future, and expectations for the results thereof, including improved customer experience, increased installation capacity, development of new products and services, and cost savings; (d) our expectations regarding projected demand and growth in 2022 and beyond, our positioning for future success, and our ability to capture demand and deliver long-term value to our shareholders; (e) our expectations for industry trends and factors, and the impact thereof on our business and strategic plans; and (f) our guidance for fiscal year 2022, including Adjusted EBITDA per customer, incremental customers, and Adjusted EBITDA, and related assumptions. 

These forward-looking statements are based on our current assumptions, expectations, and beliefs and involve substantial risks and uncertainties that may cause results, performance, or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) regulatory changes and the availability of economic incentives promoting use of solar energy; (2) potential disruptions to our operations and supply chain that may result from epidemics or natural disasters, including impacts of the COVID-19 pandemic, and other factors; (3) competition in the solar and general energy industry, supply chain constraints, interest rates, and pricing pressures; (4) changes in public policy, including the imposition and applicability of tariffs; (5) our dependence on sole- or limited-source supply relationships, including for our solar panels and other components of our products; (6) risks related to the introduction of new or enhanced products, including potential technical challenges, lead times, and our ability to match supply with demand while maintaining quality, sales, and support standards; (7) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (8) our liquidity, indebtedness, and ability to obtain additional financing for our projects and customers; and (9) challenges managing our acquisitions, joint ventures, and partnerships, including our ability to successfully manage acquired assets and supplier relationships. A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events. 

©2022 SunPower Corporation. All rights reserved. SUNPOWER, SUNPOWER FINANCIAL, SUNVAULT, and the SUNPOWER logo are trademarks or registered trademarks of SunPower Corporation in the U.S.

SUNPOWER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 
 

July 3, 2022

 

January 3, 2021

Assets

     

Current assets:

     

Cash and cash equivalents

$                    206,355

 

$                    123,735

Restricted cash and cash equivalents, current portion

1,024

 

691

Short-term investments

293,580

 

365,880

Accounts receivable, net

149,166

 

121,268

Contract assets

30,358

 

25,994

Inventories

222,524

 

214,432

Advances to suppliers, current portion

2,216

 

462

Prepaid expenses and other current assets

166,364

 

100,212

Current assets of discontinued operations

 

120,792

Total current assets

1,071,587

 

1,073,466

       

Restricted cash and cash equivalents, net of current portion

21,270

 

14,887

Property, plant and equipment, net

50,675

 

33,560

Operating lease right-of-use assets

28,809

 

31,654

Solar power systems leased, net

43,510

 

45,502

Goodwill

126,338

 

126,338

Other intangible assets, net

24,401

 

24,879

Other long-term assets

169,882

 

156,994

Long-term assets of discontinued operations

 

47,526

Total assets

$                 1,536,472

 

$                 1,554,806

       

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

$                    148,147

 

$                    138,514

Accrued liabilities

155,273

 

101,980

Operating lease liabilities, current portion

10,506

 

10,753

Contract liabilities, current portion

102,778

 

62,285

Short-term debt

62,089

 

109,568

Convertible debt, current portion

424,298

 

     Current liabilities of discontinued operations

 

86,496

Total current liabilities

903,091

 

509,596

       

Long-term debt

54,130

 

380

Convertible debt, net of current portion

 

423,677

Operating lease liabilities, net of current portion

23,544

 

28,566

Contract liabilities, net of current portion

18,674

 

18,705

Other long-term liabilities

117,942

 

141,197

Long-term liabilities of discontinued operations

 

42,661

Total liabilities

1,117,381

 

1,164,782

       

Equity:

     

Common stock

174

 

173

Additional paid-in capital

2,840,028

 

2,714,500

Accumulated deficit

(2,213,195)

 

(2,122,212)

Accumulated other comprehensive income

11,139

 

11,168

Treasury stock, at cost

(224,829)

 

(215,240)

Total stockholders' equity

413,317

 

388,389

Noncontrolling interests in subsidiaries

5,774

 

1,635

Total equity

419,091

 

390,024

Total liabilities and equity

$                 1,536,472

 

$                 1,554,806

SUNPOWER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

Total revenues

 

$         417,772

 

$         350,277

 

$         260,751

 

$         768,049

 

$         500,887

Total cost of revenues

 

336,273

 

277,968

 

200,040

 

614,241

 

394,210

Gross profit

 

81,499

 

72,309

 

60,711

 

153,808

 

106,677

Operating expenses:

                   

Research and development

 

7,405

 

5,010

 

4,258

 

12,415

 

8,882

Sales, general, and administrative

 

93,043

 

76,996

 

49,478

 

170,039

 

91,745

Restructuring (credits) charges

 

(494)

 

627

 

808

 

133

 

4,574

(Gain) loss on sale and impairment of
residential lease assets

 

 

 

(68)

 

 

(294)

(Income) expense from transition
services agreement, net

 

(494)

 

266

 

(1,656)

 

(228)

 

(4,743)

Total operating expenses

 

99,460

 

82,899

 

47,530

 

182,359

 

94,874

Operating (loss) income

 

(17,961)

 

(10,590)

 

13,181

 

(28,551)

 

11,803

Other (expense) income, net:

                   

Interest income

 

92

 

42

 

73

 

134

 

125

Interest expense

 

(5,964)

 

(5,044)

 

(6,630)

 

(11,008)

 

(13,657)

Other, net

 

(14,652)

 

1,444

 

84,075

 

(13,208)

 

39,560

Other (expense) income, net

 

(20,524)

 

(3,558)

 

77,518

 

(24,082)

 

26,028

(Loss) income from continuing operations
before income taxes and equity in earnings
of unconsolidated investees

 

(38,485)

 

(14,148)

 

90,699

 

(52,633)

 

37,831

(Provision for) benefits from income
taxes

 

(3,226)

 

11,643

 

(3,594)

 

8,417

 

1,532

Net (loss) income from continuing
operations

 

(41,711)

 

(2,505)

 

87,105

 

(44,216)

 

39,363

(Loss) income from discontinued
operations before income taxes and
equity in losses of unconsolidated
investees1

 

(20,857)

 

(26,298)

 

(13,505)

 

(47,155)

 

(15,359)

Benefits from (provision for) income
taxes from discontinued operations

 

241

 

343

 

1,169

 

584

 

1,267

Net (loss) income from discontinued
operations, net of taxes

 

(20,616)

 

(25,955)

 

(12,336)

 

(46,571)

 

(14,092)

Net (loss) income

 

(62,327)

 

(28,460)

 

74,769

 

(90,787)

 

25,271

Net (income) loss from continuing
operations attributable to noncontrolling
interests

 

(785)

 

339

 

(11)

 

(446)

 

584

Net (income) loss from discontinued
operations attributable to noncontrolling
interests

 

 

250

 

449

 

250

 

967

Net (income) loss attributable to
noncontrolling interests

 

(785)

 

589

 

438

 

(196)

 

1,551

Net (loss) income from continuing
operations attributable to stockholders

 

(42,496)

 

(2,166)

 

87,094

 

(44,662)

 

39,947

Net (loss) income from discontinued
operations attributable to stockholders

 

(20,616)

 

(25,705)

 

(11,887)

 

(46,321)

 

(13,125)

Net (loss) income attributable to
stockholders

 

$         (63,112)

 

$         (27,871)

 

$           75,207

 

$         (90,983)

 

$           26,822

                     

Net (loss) income per share attributable to
stockholders - basic:

                   

Continuing operations

 

$              (0.24)

 

$              (0.01)

 

$               0.50

 

$              (0.26)

 

$               0.23

Discontinued operations

 

$              (0.12)

 

$              (0.15)

 

$              (0.07)

 

$              (0.27)

 

$              (0.08)

Net (loss) income per share – basic

 

$              (0.36)

 

$              (0.16)

 

$               0.43

 

$              (0.53)

 

$               0.15

                     

Net (loss) income per share attributable to
stockholders - diluted:

                   

Continuing operations

 

$              (0.24)

 

$              (0.01)

 

$               0.46

 

$              (0.26)

 

$               0.23

Discontinued operations

 

$              (0.12)

 

$              (0.15)

 

$              (0.07)

 

$              (0.27)

 

$              (0.08)

Net (loss) income per share – diluted

 

$              (0.36)

 

$              (0.16)

 

$               0.39

 

$              (0.53)

 

$               0.15

                     

Weighted-average shares:

                   

Basic

 

173,951

 

173,376

 

172,640

 

173,664

 

171,920

Diluted

 

173,951

 

173,376

 

194,363

 

173,664

 

176,794

SUNPOWER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

Cash flows from operating activities:

                   

Net (loss) income

 

$         (62,327)

 

$         (28,460)

 

$           74,769

 

$         (90,787)

 

$           25,271

Adjustments to reconcile net (loss) income
to net cash used in operating activities:

                   

Depreciation and amortization

 

12,383

 

4,665

 

2,968

 

17,048

 

5,817

Stock-based compensation

 

7,072

 

5,427

 

9,613

 

12,499

 

15,050

Non-cash interest expense

 

833

 

726

 

1,650

 

1,559

 

3,155

Loss (gain) on equity investments

 

15,255

 

(1,315)

 

(83,746)

 

13,940

 

(39,016)

(Gain) loss on sale of investments

 

 

 

 

 

(1,162)

(Gain) loss on business divestitures,
net

 

 

 

(224)

 

 

(224)

Deferred income taxes

 

2,554

 

(13,750)

 

2,264

 

(11,196)

 

(1,637)

Other, net

 

104

 

845

 

(935)

 

949

 

(6,215)

Changes in operating assets and
liabilities:

                   

Accounts receivable

 

(25,585)

 

(12,354)

 

(7,023)

 

(37,939)

 

(2,909)

Contract assets

 

13,852

 

(6,519)

 

24,011

 

7,333

 

24,498

Inventories

 

18,022

 

(35,081)

 

10,096

 

(17,059)

 

1,825

Project assets

 

(2,597)

 

2,892

 

(2,892)

 

295

 

6,305

Prepaid expenses and other assets

 

(83,296)

 

(86,502)

 

702

 

(169,798)

 

5,180

Operating lease right-of-use assets

 

3,017

 

2,415

 

3,490

 

5,432

 

6,365

Advances to suppliers

 

150

 

(2,222)

 

568

 

(2,072)

 

(3,284)

Accounts payable and other
accrued liabilities

 

5,074

 

41,444

 

(18,077)

 

46,518

 

(42,229)

Contract liabilities

 

44,207

 

22,066

 

4,907

 

66,273

 

(8,554)

Operating lease liabilities

 

(4,545)

 

(3,027)

 

(3,160)

 

(7,572)

 

(6,589)

Net cash (used in) provided
by operating activities

 

(55,827)

 

(108,750)

 

18,981

 

(164,577)

 

(18,353)

Cash flows from investing activities:

                   

Purchases of property, plant and
equipment

 

(12,947)

 

(8,636)

 

(1,881)

 

(21,583)

 

(6,894)

Investments in software development
costs

 

(1,204)

 

(1,521)

 

 

(2,725)

 

Proceeds from sale of property, plant
and equipment

 

 

 

900

 

 

900

Cash paid for solar power systems

 

 

 

 

 

(635)

Cash received from sale of
investments

 

 

 

 

 

1,200

Proceeds from business divestitures,
net of de-consolidated cash

 

 

 

10,516

 

 

10,516

Cash received from C&I Solutions
sale, net of deconsolidated cash

 

146,303

 

 

 

146,303

 

Cash paid for equity investments

 

(9,420)

 

(7,000)

 

 

(16,420)

 

Proceeds from sale of equity
investment

 

 

149,830

 

 

149,830

 

Proceeds from return of capital from
equity investments

 

 

 

2,276

 

 

2,276

Cash paid for investments in
unconsolidated investees

 

(3,164)

 

(154)

 

 

(3,318)

 

Net cash provided by (used in)
investing activities

 

119,568

 

132,519

 

11,811

 

252,087

 

7,363

Cash flows from financing activities:

                   

Proceeds from bank loans and other
debt

 

78,818

 

21,458

 

24,073

 

100,276

 

95,396

Repayment of bank loans and other
debt

 

(74,100)

 

(23,944)

 

(68,497)

 

(98,044)

 

(103,573)

Repayment of non-recourse
residential and commercial financing debt

 

 

 

(85)

 

 

(9,798)

Repayment of convertible debt

 

 

 

(62,757)

 

 

(62,757)

Payments for financing leases

 

(118)

 

 

 

(118)

 

Issuance of common stock to
executive

 

 

 

2,998

 

 

2,998

Purchases of stock for tax withholding
obligations on vested restricted stock

 

(2,256)

 

(7,332)

 

(4,335)

 

(9,588)

 

(6,453)

Net cash (used in) provided
by financing activities

 

2,344

 

(9,818)

 

(108,603)

 

(7,474)

 

(84,187)

Net increase (decrease) in cash, cash
equivalents, and restricted cash

 

66,085

 

13,951

 

(77,810)

 

80,036

 

(95,177)

Cash, cash equivalents and restricted cash,
beginning of period

 

162,564

 

148,613

 

229,437

 

148,613

 

246,804

Cash, cash equivalents, and restricted
cash, end of period

 

$         228,649

 

$         162,564

 

$         151,627

 

$         228,649

 

$         151,627

                     

Reconciliation of cash, cash equivalents,
and restricted cash to the condensed
consolidated balance sheets, including
discontinued operations:

                   

Cash and cash equivalents

 

$         206,355

 

$         142,250

 

$         140,462

 

$         206,355

 

$         140,462

Restricted cash and cash equivalents,
current portion

 

1,024

 

681

 

5,818

 

1,024

 

5,818

Restricted cash and cash equivalents,
net of current portion

 

21,270

 

12,857

 

5,347

 

21,270

 

5,347

Cash, cash equivalents, and restricted
cash from discontinued operations

 

 

6,776

 

 

 

Total cash, cash
equivalents, and restricted
cash

 

$         228,649

 

$         162,564

 

$         151,627

 

$         228,649

 

$         151,627

                     

Supplemental disclosure of cash flow
information:

                   

Property, plant and equipment
acquisitions funded by liabilities
(including financing leases)

 

$             3,713

 

$                922

 

$               (473)

 

$             4,635

 

$             1,174

Right-of-use assets obtained in
exchange of lease obligations

 

649

 

877

 

 

1,526

 

11,528

Working capital adjustment related to
C&I Solutions sale

 

6,265

 

 

 

6,265

 

Accrued legal expenditures on equity
method investment

 

163

 

 

 

163

 

Deconsolidation of right-of-use assets
and lease obligations

 

 

 

3,340

 

 

3,340

Debt repaid in sale of commercial
projects

 

 

 

5,585

 

 

5,585

Cash paid for interest

 

1,312

 

9,874

 

2,090

 

11,186

 

13,527

Cash paid for income taxes

 

2,250

 

250

 

20,194

 

2,500

 

20,233

Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures. The specific non-GAAP measures listed below are: revenue; gross margin; net loss; net loss per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). Management believes that each of these non-GAAP measures are useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provide investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analysis. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; and therefore, should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP revenue includes adjustments relating to results of operations of legacy business exited/to be exited. Non-GAAP gross margin includes adjustments relating to gain/loss on sale and impairment of residential lease assets, litigation, stock-based compensation, and amortization of intangible assets, each of which is described below. In addition to the above adjustments, non-GAAP net loss and non-GAAP net loss per diluted share are adjusted for adjustments relating to mark to market gain on equity investments, gain on business divestitures, impairment of property, plant, and equipment, transaction-related costs, non-cash interest expense, restructuring charges (credits), gain on convertible debt repurchased, tax effect of these non-GAAP adjustments, each of which is described below. In addition to the above adjustments, Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards ("IFRS")
The company's non-GAAP results include adjustments under IFRS that are consistent with the adjustments made in connection with the company's internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE, our controlling shareholder and a foreign public registrant that reports under IFRS. Differences between GAAP and IFRS reflected in the company's non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company's performance, and assists in aligning the perspectives of the management with those of TotalEnergies SE.

  • Mark-to-market loss (gain) in equity investments: We recognize adjustments related to the fair value of equity investments with readily determinable fair value based on the changes in the stock price of these equity investments at every reporting period. Under U.S. GAAP, mark-to-market gains and losses due to changes in stock prices for these securities are recorded in earnings while under IFRS, an election can be made to recognize such gains and losses in other comprehensive income. Such an election was made by TotalEnergies SE. Further, we elected the Fair Value Option ("FVO") for some of our equity method investments, and we adjust the carrying value of those investments based on their fair market value calculated periodically. Such option is not available under IFRS, and equity method accounting is required for those investments. We believe that excluding these adjustments on equity investments is consistent with our internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE. and better reflects our ongoing results.

Other Non-GAAP Adjustments

  • Results of operations of businesses exited/to be exited: We exclude the results of operations of our legacy businesses that we have exited, or to be exited, from our Non-GAAP results. These legacy businesses include our light commercial business that we exited starting in the first fiscal quarter of 2022 to reinforce the Company's strategic direction to focus solely on the residential solar market, Hillsboro, Oregon facility that ceased manufacturing and revenue generation in the first quarter of 2021, as well as, results of our legacy power plant and legacy O&M businesses. We are not doing new activities for these businesses, and the remaining activities comprise of fulfillment of existing outstanding orders, true-up of estimated milestones payments, settlement of certain warranty obligations on projects and other wind-down activities. As such, these are excluded from our non-GAAP results as they are not reflective of our ongoing operating results.


  • Loss/Gain on sale and impairment of residential lease assets: In fiscal 2018 and 2019, in an effort to sell all the residential lease assets owned by us, we sold membership units representing a 49% membership interest in majority of our residential lease business and retained a 51% membership interest. We recorded impairment charges based on the expected fair value for a portion of residential lease assets portfolio that was retained. Depreciation savings from the unsold residential lease assets resulting from their exclusion from non-GAAP results historically, are excluded from our non-GAAP results as they are not reflective of ongoing operating results.


  • Stock-based compensation: Stock-based compensation relates primarily to our equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. We believe that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including compared with the performance of other companies, without the period-to-period variability created by stock-based compensation.


  • Litigation: We may be involved in various instances of litigation, claims and proceedings that result in payments or recoveries. We exclude gains or losses associated with such events because the gains or losses do not reflect our underlying financial results in the period incurred. We also exclude expenses pertaining to litigation relating to businesses that discontinued as a result of spin-off of Maxeon Solar, for which we are indemnifying them. We believe that it is appropriate to exclude such charges from our non-GAAP results as they are not reflective of ongoing operating results.


  • Transaction-related costs: In connection with material transactions such as acquisition or divestiture of a business, the company incurred transaction costs including legal and accounting fees. We believe that it is appropriate to exclude these costs from our non-GAAP results as they would not have otherwise been incurred as part of the business operations and therefore is not reflective of ongoing operating results.


  • Amortization of intangible assets and software: We incur amortization of intangible assets as a result of acquisitions, primarily from the Blue Raven acquisition, which includes brand, non-compete arrangements, and purchased technology. In addition, we also incur amortization of our capitalized internal-use software costs once the software has been placed into service, until the end of the useful life of the software. We believe that it is appropriate to exclude these amortization charges from our non-GAAP results as they are non-recurring in nature, and are therefore not reflective of ongoing operating results.


  • Executive transition costs: We incur non-recurring charges related to the hiring and transition of new executive officers. During fiscal 2021, we appointed a new chief executive officer, as well as other chief executives, and we are investing resources in those executive transitions, and in developing new members of management as we complete our transformation. We believe that it is appropriate to exclude these from our non-GAAP results as they are not reflective of ongoing operating results.


  • Acquisition-related costs: We incurred certain costs in connection with the acquisition of Blue Raven, that are either paid as part of the transaction or will be paid in the coming year, but are considered post-acquisition compensation under the applicable GAAP framework due to the nature of such items. A majority of the expense incurred in fourth quarter of fiscal 2021 represents cash paid to certain employees of Blue Raven for settlement of their pre-existing share-based payment plan, in excess of the respective fair value. For fiscal 2022, other post-combination expenses include change in fair value of contingent consideration as well as deferred post-combination employment expense payable to certain Blue Raven employees and sellers. We believe that it is appropriate to exclude these from our non-GAAP results as they are directly related to the acquisition transaction and non-recurring in nature, and are therefore not reflective of ongoing operating results.


  • Business reorganization costs: In connection with the spin-off of Maxeon into an independent, publicly traded company, we incurred non-recurring charges on third-party legal and consulting expenses, primarily to enable in separation of shared information technology systems and applications. In addition, we incurred certain non-recurring costs upon amendment, settlement or termination of historical agreements with Maxeon to fully enable separate independent operations of the two Companies that is focused on our respective core business. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.


  • Restructuring charges (credits): We incur restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company's global strategy and improving its overall operating efficiency and cost structure. Although the Company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.


  • Tax effect: This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. Our non-GAAP tax amount is based on estimated cash tax expense and reserves. We forecast our annual cash tax liability and allocates the tax to each quarter in a manner generally consistent with its GAAP methodology. This approach is designed to enhance investors' ability to understand the impact of our tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense, or tax impact of non-recurring items.


  • Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in addition to adjustments described above, we exclude the impact of the following items during the period:
  • Cash interest expense, net of interest income
  • Provision for income taxes
  • Depreciation

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.

SUNPOWER CORPORATION

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except percentages and per share data)

(Unaudited)

 

Adjustments to Revenue: 

 
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

GAAP revenue

 

$         417,772

 

350,277

 

$         260,751

 

$         768,049

 

$         500,886

Other adjustments:

                   

Results of operations of businesses
exited/to be exited

 

(3,674)

 

(14,208)

 

(6,631)

 

(17,882)

 

(8,829)

Non-GAAP revenue

 

$         414,098

 

336,069

 

$         254,120

 

$         750,167

 

$         492,057

 

Adjustments to Gross Profit Margin: 

   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

GAAP gross profit from continuing operations

 

$       81,499

 

$       72,309

 

$       60,710

 

$     153,808

 

$     106,676

Other adjustments:

                   

Results of operations of businesses
exited/to be exited

 

5,348

 

(260)

 

(3,608)

 

5,088

 

3,303

Executive transition costs

 

85

 

378

 

 

463

 

(Gain) loss on sale and impairment of
residential lease assets

 

(278)

 

(279)

 

(519)

 

(557)

 

(1,013)

Stock-based compensation expense

 

1,398

 

899

 

627

 

2,297

 

1,164

Business reorganization costs

 

11

 

 

 

11

 

Transaction-related costs

 

56

 

 

 

56

 

Non-GAAP gross profit

 

$       88,119

 

$       73,047

 

$       57,210

 

$     161,166

 

$     110,130

                     

GAAP gross margin (%)

 

19.5 %

 

20.6 %

 

23.3 %

 

20.0 %

 

21.3 %

Non-GAAP gross margin (%)

 

21.3 %

 

21.7 %

 

22.5 %

 

21.5 %

 

22.4 %

 

Adjustments to Net Income (Loss): 

   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

GAAP net (loss) income from continuing
operations attributable to stockholders

 

$         (42,496)

 

$            (2,166)

 

$           87,094

 

$         (44,662)

 

$           39,947

Adjustments based on IFRS:

                   

Mark-to-market loss (gain) on equity
investments

 

15,255

 

(1,315)

 

(83,746)

 

13,940

 

(39,016)

Other adjustments:

                   

Results of operations of businesses
exited/to be exited

 

7,503

 

2,933

 

(3,116)

 

10,436

 

8,084

(Gain) loss on sale and impairment of
residential lease assets

 

(278)

 

(279)

 

(587)

 

(557)

 

(5,970)

Litigation

 

3,166

 

177

 

3,447

 

3,343

 

8,580

Stock-based compensation expense

 

7,054

 

5,329

 

9,188

 

12,383

 

13,542

Amortization of intangible assets and
software

 

2,786

 

1,978

 

 

4,764

 

(Gain) loss on business divestitures, net

 

 

 

(5,290)

 

 

(5,290)

Transaction-related costs

 

259

 

964

 

(82)

 

1,223

 

118

Executive transition costs

 

3,685

 

1,469

 

502

 

5,154

 

502

Business reorganization costs

 

4,521

 

 

901

 

4,521

 

1,855

Restructuring (credits) charges

 

(639)

 

186

 

871

 

(453)

 

766

Acquisition-related costs

 

2,310

 

5,808

 

 

8,118

 

Tax effect

 

2,025

 

(12,186)

 

2,911

 

(10,161)

 

(830)

Non-GAAP net income (loss) attributable
to stockholders

 

$             5,151

 

$             2,898

 

$           12,093

 

$             8,049

 

$           22,288

 

Adjustments to Net Income (loss) per diluted share:

   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

Net income (loss) per diluted share

                   

Numerator:

                   

GAAP net (loss) income available
to common stockholders1

 

$         (42,496)

 

$            (2,166)

 

$           87,094

 

$         (44,662)

 

$           39,947

Add: Interest expense on 4.00%
debenture due 2023, net of tax

 

 

 

3,126

 

 

Add: Interest expense on 0.875%
debenture due 2021, net of tax

 

 

 

67

 

 

168

GAAP net income (loss) available
to common stockholders1

 

$         (42,496)

 

$            (2,166)

 

$           90,287

 

$         (44,662)

 

$           40,115

                     

Non-GAAP net income (loss)
available to common stockholders1

 

$             5,151

 

$             2,898

 

$           12,093

 

$             8,049

 

$           22,288

                     

Denominator:

                   

GAAP weighted-average shares

 

173,951

 

173,376

 

172,640

 

173,664

 

171,920

Effect of dilutive securities:

                   

Restricted stock units

 

 

 

3,084

 

 

3,299

0.875% debentures due 2021

 

 

 

1,571

 

 

1,575

4.00% debentures due 2023

 

 

 

17,068

 

 

GAAP dilutive weighted-average
common shares:

 

173,951

 

173,376

 

194,363

 

173,664

 

176,794

                     

Non-GAAP weighted-average
shares

 

173,951

 

173,376

 

172,640

 

173,664

 

171,920

Effect of dilutive securities:

                   

Restricted stock units

 

770

 

1,399

 

3,084

 

790

 

3,299

Non-GAAP dilutive weighted-
average common shares1

 

174,721

 

174,775

 

175,724

 

174,454

 

175,219

                     

GAAP dilutive net (loss) income per
share - continuing operations

 

$              (0.24)

 

$              (0.01)

 

$               0.46

 

$              (0.26)

 

$               0.23

Non-GAAP dilutive net income (loss)
per share - continuing operations

 

$               0.03

 

$               0.02

 

$               0.07

 

$               0.05

 

$               0.13

 

1In accordance with the if-converted method, net (loss) income available to common stockholders excludes interest expense related to the 0.875% and 4.00% debentures if the debentures are considered converted in the calculation of net (loss) income per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the debenture under the if-converted method is excluded from the calculation of non-GAAP net income (loss) per diluted share.

Adjusted EBITDA:

 
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

July 3, 2022

 

April 3, 2022

 

July 4, 2021

 

July 3, 2022

 

July 4, 2021

GAAP net (loss) income from continuing
operations attributable to stockholders

 

$         (42,496)

 

$            (2,166)

 

$           87,094

 

$         (44,662)

 

$           39,947

Adjustments based on IFRS:

                   

Mark-to-market loss (gain) on equity
investments

 

15,255

 

(1,315)

 

(83,746)

 

13,940

 

(39,016)

Other adjustments:

                   

Results of operations of businesses
exited/to be exited

 

7,503

 

2,933

 

(3,116)

 

10,436

 

8,084

(Gain) loss on sale and impairment of
residential lease assets

 

(278)

 

(279)

 

(587)

 

(557)

 

(5,970)

Litigation

 

3,166

 

177

 

3,447

 

3,343

 

8,580

Stock-based compensation expense

 

7,054

 

5,329

 

9,188

 

12,383

 

13,542

Amortization of intangible assets and
software

 

2,786

 

1,978

 

 

4,764

 

(Gain) loss on business divestitures,
net

 

 

 

(5,290)

 

 

(5,290)

Transaction-related costs

 

259

 

964

 

(82)

 

1,223

 

118

Executive transition costs

 

3,685

 

1,469

 

502

 

5,154

 

502

Business reorganization costs

 

4,521

 

 

901

 

4,521

 

1,855

Restructuring (credits) charges

 

(639)

 

186

 

871

 

(453)

 

766

Acquisition-related costs

 

2,310

 

5,808

 

 

8,118

 

Cash interest expense, net of interest
income

 

5,829

 

4,878

 

6,498

 

10,707

 

13,449

Provision for (benefit from) income
taxes

 

2,720

 

(11,676)

 

3,560

 

(8,956)

 

(1,564)

Depreciation

 

3,571

 

2,873

 

3,198

 

6,444

 

6,227

Adjusted EBITDA

 

$           15,246

 

$           11,159

 

$           22,438

 

$           26,405

 

$           41,230

FY 2022 GUIDANCE 

 

(in thousands)

FY 2022

Residential Customers

73,000 - 80,000

Residential Adjusted EBITDA/Customer1

$2,000 - $2,400

Adjusted EBITDA

$90 million -$110 million

Net (Loss) Income (GAAP)

$(15) million -$(35) million

  1. Excluding Product & Digital operating expenses for Residential only.

  2. Adjusted EBITDA guidance for FY 2022 includes net adjustments that decrease GAAP net loss by approximately $125 million primarily relating to the following adjustments: stock-based compensation expense, results of operations of businesses exited/to be exited, mark-to-market (gain) loss on equity investments, net, acquisition-related costs, interest expense, depreciation and amortization, income taxes, and other non-recurring adjustments.

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