SunPower Reports Fourth Quarter and Fiscal Year 2019 Results

|Feb 12|magazine130 min read

SAN JOSE, Calif., Feb. 12, 2020 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its fourth quarter ended Dec. 29, 2019.

Fourth Quarter Company Highlights

  • Strong demand in U.S. and international distributed generation (DG) markets
  • Exceeded fourth quarter cash target, successful capital raise, business unit cash generation
  • Announced decision to create two strategically-aligned, and independent companies

SunPower Energy Services (SPES)

  • Record fourth quarter residential revenue with 27 percent megawatt (MW) growth versus fourth quarter 2018
  • Positive field results from residential Equinox Storage product beta tests
  • Strong commercial direct origination performance - restructuring commercial execution organization

SunPower Technologies (SPT)

  • Record global shipments - more than 80 percent year over year volume growth
  • Announced proposed spin-off of Maxeon Solar Technologies (Maxeon Solar) to shareholders
  • $298 million TZS equity investment in Maxeon Solar to accelerate Maxeon-5 capacity ramp

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

4th Quarter

 2019

3rd Quarter
2019

 4th Quarter
2018

Fiscal Year
2019

Fiscal Year
2018

GAAP revenue

$603.8

$476.0

$456.8

$1,864.2

$1,726.1

GAAP gross margin

15.8%

10.1%

(1.7%)

6.8%

(17.2%)

GAAP net income (loss)

$5.4

$(15.0)

$(158.2)

$22.2

$(811.1)

GAAP net income (loss) per diluted share

$0.03

$(0.11)

$(1.12)

$0.15

$(5.76)

Non-GAAP revenue1

$607.0

$491.7

$525.4

$1,992.1

$1,814.9

Non-GAAP gross margin1

20.8%

15.9%

6.9%

14.0%

7.5%

Non-GAAP net income (loss)1

$35.8

$10.6

$(30.3)

$(42.2)

$(101.4)

Non-GAAP net income (loss) per diluted share1

$0.23

$0.07

$(0.21)

$(0.29)

$(0.72)

Adjusted EBITDA1

$71.5

$42.0

$13.6

$97.8

$111.2

MW Recognized

707

586

461

2,455

1,355

Cash2

$423.0

$189.0

$309.4

$423.0

$309.4



1

Information 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.

2

Includes cash, and cash equivalents, excluding restricted cash

Fourth Quarter 2019 Results

"Overall, we exited the year with solid fourth quarter financial performance despite execution challenges in our commercial direct business," said Tom Werner, SunPower CEO and chairman of the board. "We also achieved a number of important strategic milestones during the quarter.  These included the announcement of our proposed Maxeon Solar spin-off and planned equity investment from TZS, initial installations of our residential Equinox Storage system, as well as a successful capital raise and partial convertible bond retirement to further strengthen our balance sheet."

SunPower Energy Services (SPES)

"The strategic decision to combine our residential and commercial dealer operations into a combined channels business is paying dividends as we posted strong financial results for this unit in the fourth quarter.  Our residential business achieved record revenue and installation volume, and in new homes, we remain the market leader as we grew this business by more than 50 percent last year and exited 2019 with a backlog of 45,000 homes. We expect new homes volume growth to exceed 50 percent in 2020 as we leverage the current California new home solar mandate. Finally, we remain very excited about the launch of our Equinox Storage product as we added to our beta installations in the fourth quarter and see strong demand for Equinox Storage in 2020.

"In Commercial Direct, we maintained our market share lead and increased installation volume year over year.  Our origination teams once again performed well, but deployment execution remained challenged.  As a result of this underperformance, we have taken a number of steps to improve results including changes to our reporting structure, instituting new processes to streamline permitting and regulatory requirements and actions to improve installation execution.  We now expect our commercial direct business to return to profitability in the second half of this year.  Demand for our Helix Storage solution remains strong as evidenced by our plan to add 20 megawatt hours (MWh) of storage to the Chevron Lost Hills solar project, our largest commercial storage award to date.  Additionally, our storage pipeline continues to expand, now exceeding 175-MW with attach rates of 35 percent.

SunPower Technologies (SPT)

"SPT posted a very strong quarter, beating our financial targets across the board including volume, revenue, margin, EBITDA, and cash flow. Growth was driven primarily by demand in the global DG markets, with DG volume up over 95 percent year-over-year. For the full year 2019, DG shipments grew approximately 75 percent. During the fourth quarter, we completed commercialization of our Maxeon 5 technology, ramping our first line-pair to full production. Customer demand for this product is strong, and the technology is ready for accelerated ramp consistent with the planned $298 million equity investment from TZS. Demand for our Performance Series (P-Series) product also remains high, comprising approximately half of our fourth quarter and full year 2019 shipment volume.

"Finally, we were pleased to announce the strategic decision to separate into two independent, complementary, strategically-aligned and publicly-traded companies: SunPower and Maxeon Solar. This separation will enable each company to focus on distinct offerings built on extensive experience across the solar value chain while, we believe, unlocking long-term shareholder value. We remain on track to complete the separation in the second quarter of fiscal 2020, subject to closing conditions," Werner concluded.

Consolidated Financials

"Our solid fourth quarter performance reflects the results of our focus on the DG market and increased operational discipline," said Manavendra Sial, SunPower chief financial officer. "In relation to the balance sheet, we increased our liquidity as we generated positive cash at the business unit level, completed a successful capital raise and retired more than $30 million of convertible debt in the first quarter of 2020. We also continued to prudently manage our expenses while meeting our cost reduction targets.  We remain committed to achieving positive cash flow this year while continuing to improve our profitability throughout 2020."

Fourth quarter fiscal year 2019 non-GAAP results exclude net adjustments that, in the aggregate, increased non-GAAP earnings by $30.4 million, including $27.5 million related to the cost of above-market polysilicon, $18.7 million related to business reorganization costs and restructuring charges, $8.0 million related to stock-based compensation expense, $1.8 million related to amortization of intangible assets, and $2.6 million related to other non-recurring items, partially offset by $28.2 million related to mark-to-market gain on equity investments, and tax effect of these items.

Financial Outlook

The company's first quarter 2020 GAAP and non-GAAP guidance is as follows: on a GAAP basis, revenue of $435 million to $470 million, gross margin of 3 percent to 6 percent and net loss of $85 million to $70 million. On a non-GAAP basis, the company expects revenue of $435 million to $470 million, gross margin of 9 percent to 12 percent, Adjusted EBITDA of ($15) million to $0 million and MW deployed in the range of 520 MW to 570 MW.

The company's fiscal year 2020 GAAP and non-GAAP guidance is as follows: on a GAAP basis, revenue of $2.1 billion to $2.3 billion and a net loss of $195 million to $145 million. On a non-GAAP basis, revenue of $2.1 billion to $2.3 billion and operational expenses of less than $260 million. Gigawatts recognized is expected to be in the range of 2.5 GW to 2.75 GW and capital expenditures of approximately $100 million.

As a result of the restructuring of its commercial direct business, the company expects fiscal year 2020 Adjusted EBITDA guidance in the range of $125 million to $175 million.

The company will host a conference call for investors this afternoon to discuss its fourth quarter and fiscal year 2019 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at http://investors.sunpower.com/events.cfm.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its fourth quarter and fiscal year 2019 performance on the Events and Presentations section of SunPower's Investor Relations page at http://investors.sunpower.com/events.cfm.

About SunPower

As one of the world's most innovative and sustainable energy companies, SunPower Corporation (NASDAQ:SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools and utilities around the globe rely on SunPower's more than 30 years of proven experience. From the first flip of the switch, SunPower delivers maximum value and superb performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, North and South America. For more information about how SunPower is changing the way our world is powered, 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) statements regarding the anticipated spin-off of Maxeon Solar, including timing and certainty, the associated benefits and costs to the newly separated companies, and the equity investment by TZS into Maxeon Solar and the use of proceeds from such investment; (b) our plans and expectations regarding expansion of Maxeon 5 production; (c) our expectations regarding business restructuring and anticipated impact on financial performance; (d) our expectations and plans regarding market traction, growth, demand, and volume; (e) our plans and expectations for our products and planned products, including anticipated markets and demand, cost impacts, and impacts on our financial performance and our ability to meet our targets and goals; (f) our plans and expectations for initiatives to improve execution and performance in our Commercial Direct business, including timing and anticipated impact on financial performance and the anticipated timing of returning to profitability; (g) our plans and expectations regarding manufacturing expansion, and production goals and ramps, including the timing of our Maxeon 5 and P-Series production expansion; (h) our expectations regarding 2020 financial performance, including plans to achieve positive cash flow and improve profitability;  (i) our first quarter fiscal 2020 guidance, including GAAP revenue, gross margin, and net income/(loss), as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed, and related assumptions; and (j) fiscal year 2020 guidance, including, GAAP and non-GAAP revenue, net income/(loss), non-GAAP operational expenses, non-GAAP GW deployed, non- GAAP capital expenditures, 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) challenges in executing transactions key to our strategic plans, including regulatory and other challenges that may arise; (2) 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; (3) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (4) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (5) changes in public policy, including the imposition and applicability of tariffs; (6) regulatory changes and the availability of economic incentives promoting use of solar energy; (7) fluctuations in our operating results; (8) potential disruptions to our operation and supply chain that may result from epidemics or natural disasters; (9) appropriately sizing our manufacturing capacity and containing manufacturing and logistics difficulties that could arise; and (10) challenges managing our acquisitions, joint ventures and partnerships, including our ability to successfully manage acquired assets and supplier relationships. In addition, the proposed and the associated investment by TZS in Maxeon Solar may not be consummated within the anticipated period or at all and the ultimate results of any separation depend on a number of factors, including the development of final plans and the impact of local regulatory requirements.  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.

©2020 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, EQUINOX and HELIX are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.

 

SUNPOWER CORPORATION

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 (Unaudited) 






Dec. 29,


Dec. 30,


2019


2018

Assets




Current assets:




Cash and cash equivalents

$     422,955


$     309,407

Restricted cash and cash equivalents, current portion

26,348


41,762

Restricted short-term marketable securities

6,187


-

Accounts receivable, net

226,476


175,605

Contract assets

99,426


58,994

Inventories

358,257


308,146

Advances to suppliers, current portion

107,388


37,878

Project assets - plants and land, current portion

12,650


10,796

Prepaid expenses and other current assets

121,244


131,183

Total current assets

1,380,931


1,073,771





Restricted cash and cash equivalents, net of current portion

9,354


12,594

Restricted long-term marketable securities

-


5,955

Property, plant and equipment, net

323,726


839,871

Operating lease right-of-use assets

51,258


-

Solar power systems leased and to be leased, net

54,338


92,557

Advances to suppliers, net of current portion

13,993


133,694

Long-term financing receivables, net - held for sale

-


19,592

Other intangible assets, net

7,466


12,582

Other long-term assets

330,855


162,033

Total assets

$  2,171,921


$  2,352,649





Liabilities and Equity




Current liabilities:




Accounts payable

$     441,759


$     325,550

Accrued liabilities

203,890


235,252

Operating lease liabilities, current portion

9,463


-

Contract liabilities, current portion

138,441


104,130

Short-term debt

104,856


40,074

Total current liabilities

898,409


705,006





Long-term debt

113,827


40,528

Convertible debt

820,259


818,356

Operating lease liabilities, net of current portion

46,089


-

Contract liabilities, net of current portion

67,538


99,509

Other long-term liabilities

204,300


839,136

Total liabilities

2,150,422


2,502,535





Equity:




Preferred stock

-


-

Common stock

168


141

Additional paid-in capital

2,661,819


2,463,370

Accumulated deficit

(2,449,679)


(2,480,988)

Accumulated other comprehensive loss

(9,512)


(4,150)

Treasury stock, at cost

(192,633)


(187,069)

Total stockholders' deficit

10,163


(208,696)

Noncontrolling interests in subsidiaries

11,336


58,810

Total deficit

21,499


(149,886)

Total liabilities and equity

$  2,171,921


$  2,352,649

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)














THREE MONTHS ENDED

TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,


Dec. 30,


Dec. 29,


Dec. 30,



2019


2019


2018


2019


2018












Revenue:











   SunPower Energy Services


$  352,226


$  277,688


$   265,427


$  1,019,861


$  1,045,614

   SunPower Technologies


434,708


333,896


277,256


1,314,379


1,069,010

Intersegment eliminations


(183,173)


(135,626)


(85,846)


(470,015)


(388,539)

Total revenue


603,761


475,958


456,837


1,864,225


1,726,085

Cost of revenue:











   SunPower Energy Services


306,698


248,417


245,301


915,455


889,410

   SunPower Technologies 


369,363


315,293


296,872


1,285,241


1,496,909

Intersegment eliminations


(167,439)


(136,003)


(77,765)


(462,376)


(363,153)

Total cost of revenue


508,622


427,707


464,408


1,738,320


2,023,166

Gross profit (loss)


95,139


48,251


(7,571)


125,905


(297,081)

Operating expenses:











Research and development


18,262


16,101


15,481


67,515


81,705

Sales, general and administrative


70,875


64,734


53,839


260,443


260,111

Restructuring charges 


8,039


4,283


(1,107)


14,110


17,497

Loss on sale and impairment of residential lease assets


(2,931)


10,756


81,086


25,352


251,984

Gain on business divestiture


-


-


-


(143,400)


(59,347)

Total operating expenses


94,245


95,874


149,299


224,020


551,950

Operating income (loss)


894


(47,623)


(156,870)


(98,115)


(849,031)

Other income (expense), net:











Interest income


259


1,025


777


2,702


3,057

Interest expense


(9,489)


(10,649)


(30,214)


(53,353)


(108,011)

Other, net


28,709


45,184


6,539


174,734


55,314

Other income (expense), net


19,479


35,560


(22,898)


124,083


(49,640)

Income (loss) before income taxes and equity in losses of unconsolidated investees 


20,373


(12,063)


(179,768)


25,968


(898,671)

(Provision) benefit for income taxes


(9,388)


(5,378)


8,379


(26,631)


(1,010)

Equity in losses of unconsolidated investees


(5,008)


(1,767)


(757)


(7,058)


(17,815)

Net income (loss)


5,977


(19,208)


(172,146)


(7,721)


(917,496)

    Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests


(537)


4,191


13,972


29,880


106,405

Net income (loss) attributable to stockholders


$      5,440


$  (15,017)


$ (158,174)


$        22,159


$   (811,091)























Basic net income (loss) per share attributable to stockholders


$         0.04


$      (0.11)


$        (1.12)


$            0.15


$          (5.76)

Diluted net income (loss) per share attributable to stockholders


$         0.03


$      (0.11)


$        (1.12)


$            0.15


$          (5.76)












Basic weighted-average shares


152,439


142,553


141,136


144,796


140,825

Diluted weighted-average shares


156,004


142,553


141,136


147,525


140,825

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)














THREE MONTHS ENDED

TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,


Dec. 30,


Dec. 29,


Dec. 30,



2019


2019


2018


2019


2018












Cash flows from operating activities:











Net income (loss)


$         5,977


$    (19,208)


$   (172,146)


$      (7,721)


$   (917,496)

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











Depreciation and amortization


18,059


15,298


24,060


80,081


127,204

Stock-based compensation


8,008


6,991


6,266


26,935


26,353

Non-cash interest expense


2,005


2,542


3,213


9,472


15,346

Non-cash restructuring charges


-


3,528


-


5,874


-

Dividend from equity method investee


-


-


-


-


3,947

Equity in losses of unconsolidated investees


5,008


1,767


756


7,058


17,815

Mark-to-market (gain) loss on equity investment with readily determinable fair value


(29,250)


(28,538)


150


(158,288)


6,375

Gain on business divestiture


-


-


-


(143,400)


(59,347)

Gain on sale of investments without readily determinable fair value


-


(17,275)


(3,628)


(17,275)


(54,196)

Deferred income taxes


4,567


(1,545)


(9,868)


5,067


(6,862)

Impairment of equity method investment


-


-


-


-


-

Impairment of property, plant and equipment


-


-


-


777


369,168

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


(2,931)


10,755


81,086


33,778


251,984

Gain on sale of assets


(3,829)


(21,383)


-


(25,212)


-

Other, net


-


-


(1,059)


-


(6,796)

Accounts receivable


(20,484)


2,921


18,916


(66,194)


(175)

Contract assets


(20,139)


(25,516)


(5,495)


(38,246)


(43,509)

Inventories


(20,311)


(45,989)


64,617


(128,404)


(39,174)

Project assets


7,050


(3,040)


48,652


(2,188)


39,512

Prepaid expenses and other assets


(10,228)


16,967


(17,161)


(8,746)


22,763

Operating lease right-of-use assets


2,311


14,999


-


8,530


-

Long-term financing receivables, net - held for sale


-


481


(31,006)


(473)


(182,937)

Advances to suppliers


16,899


8,518


15,236


50,191


44,417

Accounts payable and other accrued liabilities


15,384


52,810


(58,230)


79,394


(127,286)

Contract liabilities


19,404


4,709


9,328


27,531


(30,495)

Operating lease liabilities


(1,752)


(15,865)


-


(8,954)


-

Net cash used in operating activities


(4,252)


(36,073)


(26,313)


(270,413)


(543,389)

Cash flows from investing activities:











Purchases of property, plant and equipment


(12,295)


(16,896)


(7,198)


(47,395)


(44,906)

Cash paid for solar power systems, leased, net


-


-


(12,953)


-


(68,612)

Cash paid for solar power systems


(1,458)


(8,503)


(37,468)


(53,284)


(41,808)

Cash outflow from sale of residential lease portfolio, net of cash sold


-


-


-


-


-

Proceeds from sale of cost method investment


-


-


-


-


-

Cash paid for acquisitions, net of cash acquired


-


-


(17,000)


-


(17,000)

Dividend from equity method investee


-


-


-


-


12,952

Proceeds from sale of investments


-


42,957


35,942


42,957


453,708

Proceeds from sale of assets


20,000


39,742


-


59,970


-

Proceeds from business divestiture, net of cash sold


-


-


10,000


40,491


23,257

Proceeds from sale of distribution rights of debt refinancing


1,950


-


-


1,950


-

Cash outflow from sale of residential lease portfolio, net of cash received


5,474


(16,397)


(28,004)


(10,923)


(28,004)

Cash paid for investments in unconsolidated investees


-


(2,400)


(626)


(12,400)


(14,687)

Net cash provided by (used in) investing activities


13,671


38,503


(57,307)


21,366


274,900

Cash flows from financing activities:











Proceeds from bank loans and other debt


150,439


87,823


60,199


381,928


227,676

Repayment of 0.75% debentures due 2018, bank loans and other debt


(61,920)


(84,035)


(59,023)


(271,015)


(535,252)

Proceeds from issuance of non-recourse residential financing, net of issuance costs


-


6,528


5,079


72,259


192,287

Repayment of non-recourse residential financing


-


(1,803)


(2,427)


(2,959)


(17,358)

Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects


4,371


1,842


43,526


35,790


151,204

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects


-


-


(2,742)


(316)


(21,918)

Proceeds of common stock equity offering, net of offering costs


171,834


-


-


171,834


-

Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs


3,004


-


75,754


3,004


126,020

Repayment of non-recourse power plant and commercial financing


-


-


(26,383)


-


(31,282)

Payment for prior business combination


(30,000)


-


-


(39,000)


-

Settlement of contingent consideration arrangement, net of cash received


802


-


-


(1,646)


-

Purchases of stock for tax withholding obligations on vested restricted stock


(908)


(292)


(281)


(5,565)


(5,530)

Net cash provided by (used in) financing activities


237,622


10,063


93,702


344,314


85,847

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents


881


(1,510)


1,296


(374)


2,068

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


247,922


10,983


11,378


94,893


(180,574)

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


210,735


199,752


352,385


363,763


544,337

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


$    458,657


$    210,735


$     363,763


$    458,657


$     363,763


































Non-cash transactions:











Stock consideration received from business divestiture


$                -


$                -


$                 -


$                -


$        42,600

Costs of solar power systems, leased, sourced from existing inventory


$                -


$                -


$          5,975


$                -


$        36,384

Costs of solar power systems, leased, funded by liabilities


$                -


$                -


$          3,631


$                -


$          3,631

Costs of solar power systems sourced from existing inventory


$      21,173


$        8,033


$                  -


$      29,206


$                  -

Costs of solar power systems funded by liabilities


$        2,671


$        3,604


$                  -


$        2,671


$                  -

Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets 


$                -


$                -


$        56,332


$                -


$        86,540

Property, plant and equipment acquisitions funded by liabilities


$      13,745


$      11,911


$          8,214


$      13,745


$          8,214

Contractual obligations satisfied with inventory


$                -


$                -


$          7,924


$                -


$        56,840

Acquisition of noncontrolling interests funded by Mezzanine Loan proceeds


$                -


$                -


$                  -


$                -


$        12,400

Assumption of debt by buyer upon sale of equity interest


$                -


$                -


$                  -


$                -


$        27,321

Assumption of debt by buyer in connection with sale of residential lease assets


$                -


$      69,076


$      561,588


$      69,076


$      561,588

Acquisition funded by liabilities


$                -


$                -


$          9,000


$                -


$          9,000

Retained interest in SunStrong lease portfolio


$                -


$                -


$          9,750


$                -


$          9,750

Receivables in connection with sale of residential lease assets


$        2,570


$        8,043


$        12,510


$        2,570


$        12,510

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


$        7,398


$        8,939


$                  -


$    111,142


$                  -

Derecognition of financing obligations upon business divestiture


$                -


$                -


$                  -


$    590,884


$                  -

Holdback related to business divestiture


$        1,927


$                -


$                  -


$        1,927


$                  -

Holdback related to sale of manufacturing facility


$                -


$      18,300


$                  -


$                -


$                  -

Aged supplier financing balances reclassified from AP to short-term debt


$      22,500


$      22,852


$                  -


$      45,352


$                  -

Settlement of prior debt obligation with inventory


$        1,701


$                -


$                  -


$        1,701


$                  -

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 8point3, legacy utility and power plant projects, legacy sale-leaseback transactions and construction services for residential customer contracts, each of which is described below. In addition to the above adjustments, non-GAAP gross margin includes adjustments relating to business process improvement costs, loss on sale and impairment of residential lease assets, impairment of property, plant, and equipment, cost of above-market polysilicon, litigation, stock-based compensation, amortization of intangible assets, and depreciation of idle equipment, 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) loss on equity investments, gain on business divestiture, transaction-related costs, business reorganization costs, non-cash interest expense, restructuring charges, and 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 Total S.A., 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 Total S.A.

  • 8point3: Historically, the company included adjustments related to the sales of projects contributed to 8point3 Group, an equity method investee ("8point3") based on the difference between the fair market value of the consideration received and the net carrying value of the projects contributed, of which, a portion is deferred in proportion to the company's retained equity stake in 8point3. The deferred profit was subsequently recognized over time. Under GAAP, these sales were recognized under either real estate, lease, or consolidation accounting guidance depending upon the nature of the individual asset contributed, with outcomes ranging from no, partial, or full profit recognition. IFRS profit, less deferrals associated with retained equity, is recognized for sales related to the residential lease portfolio. Revenue for other projects sold was deferred until those projects reach commercial operation. On June 19, 2018, the company sold its equity interest in the 8point3 Group.
  • Legacy utility and power plant projects: The company included adjustments related to the revenue recognition of certain utility and power plant projects based on percentage-of-completion accounting and, when relevant, the allocation of revenue and margin to our project development efforts at the time of initial project sale. Under IFRS, such projects were accounted for when the customer obtains control of the promised goods or services which generally results in earlier recognition of revenue and profit than U.S. GAAP. Over the life of each project, cumulative revenue and gross margin are eventually equivalent under both GAAP and IFRS; however, revenue and gross margin is generally recognized earlier under IFRS.
  • Legacy sale-leaseback transactions: The company included adjustments related to the revenue recognition on certain legacy sale-leaseback transactions entered into before December 31, 2018, based on the net proceeds received from the buyer-lessor. Under U.S. GAAP, these transactions were accounted for under the financing method in accordance with the applicable accounting guidance. Under such guidance, no revenue or profit is recognized at the inception of the transaction, and the net proceeds from the buyer-lessor are recorded as a financing liability. Imputed interest is recorded on the liability equal to our incremental borrowing rate adjusted solely to prevent negative amortization. Under IFRS, such revenue and profit is recognized at the time of sale to the buyer-lessor if certain criteria are met. Upon adoption of IFRS 16, Leases, on December 31, 2018, IFRS is aligned with GAAP.
  • Mark-to-market (gain) loss in equity investments: The company recognizes 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 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 Total S.A. 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 such investments. Management believes that excluding these adjustments on equity investments is consistent with our internal reporting process as part of its status as a consolidated subsidiary of Total S.A. and better reflects our ongoing results.

Other Non-GAAP Adjustments

  • Business process improvement costs: During fiscal 2019, the company initiated a project to improve its manufacturing and related processes to improve gross margin in coming years and engaged third party experts to consult on business process improvements. Management believes it is appropriate to exclude these consulting expenses from our non-GAAP results as they are non-recurring in nature, and are not reflective of the company's ongoing operating results.
  • Loss (gain) on sale and impairment of residential lease assets: In the fourth quarter of fiscal 2017, the company made the decision to sell or refinance its interest in the residential lease portfolio and as a result of this triggering event, determined it was necessary to evaluate the potential for impairment in its ability to recover the carrying amount of the residential lease portfolio. In accordance with such evaluation, the company recognized a non-cash impairment charge on its solar power systems leased and to be leased and an allowance for losses related financing receivables. In connection with the impairment loss, the carrying values of the company's solar power systems leased and to be leased were reduced which resulted in lower depreciation charges. In the fourth quarter of fiscal 2018, the company sold membership units representing a 49% membership interest in its residential lease business and retained a 51% membership interest. The loss on divestment and the remaining unsold residential lease assets impairment with its corresponding depreciation savings are excluded from the company's non-GAAP results as they are non-cash in nature and not reflective of ongoing operating results. Additionally, in the third quarter of fiscal 2019, in continuation with our intention to deconsolidate all the residential lease assets owned by us, we sold the remainder of residential lease assets still owned by us, that were not previously sold. Gain/loss from such activity is excluded from the company's non-GAAP results as it is non-cash in nature and not reflective of ongoing operating results.
  • Impairment of property, plant, and equipment: The Company evaluates property, plant and equipment for impairment whenever certain triggering events or changes in circumstances arise. This evaluation includes consideration of technology obsolescence that may indicate that the carrying value of such assets may not be recoverable.  In accordance with such evaluation, the company recognizes a non-cash impairment charge when the asset group's fair value is lower than its carrying value. Such impairment charge is excluded from the company's non-GAAP results as it is non-recurring in nature and not reflective of ongoing operating results. Any such non-recurring impairment charge recorded by our equity method or other unconsolidated investees is also excluded from our non-GAAP results as it is not reflective of their ongoing operating results.
  • Construction revenue on solar services contracts: Upon adoption of the new lease accounting guidance ("ASC 842") in the first quarter of fiscal 2019, revenue and cost of revenue on solar services contracts with residential customers are recognized ratably over the term of those contracts, once the projects are placed in service. For non-GAAP results, the company recognizes revenue and cost of revenue upfront based on the expected cash proceeds to align with the legacy lease accounting guidance. Management believes it is appropriate to recognize revenue and cost of revenue upfront based on total expected cash proceeds, as it better reflects the company's ongoing results as such method aligns revenue and costs incurred most accurately in the same period.
  • Cost of above-market polysilicon: The company has entered into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to 10 years. The prices in select legacy supply agreements, which incorporate a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed current market prices. Additionally, in order to reduce inventory and improve working capital, the company has periodically elected to sell polysilicon inventory in the marketplace at prices below the company's purchase price, thereby incurring a loss. Management believes that it is appropriate to exclude the impact of its above-market cost of polysilicon, including the effect of above-market polysilicon on product costs, losses incurred on sales of polysilicon to third parties, and inventory reserves and project asset impairments from the company's non-GAAP results as they are not reflective of ongoing operating results.
  • Stock-based compensation: Stock-based compensation relates primarily to the company's equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. Management believes 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.
  • Amortization of intangible assets: The company incurs amortization of intangible assets as a result of acquisitions, which includes patents, purchased technology, project pipeline assets, and in-process research and development. Management believes that it is appropriate to exclude these amortization charges from the company's non-GAAP financial measures as they arise from prior acquisitions, which are not reflective of ongoing operating results.
  • Depreciation of idle equipment: In the fourth quarter of 2017, the company changed the deployment plan for its next generation of solar cell technology, and revised its depreciation estimates to reflect the use of certain assets over its shortened useful life. Such asset depreciation is excluded from the company's non-GAAP results as it is non-cash in nature and not reflective of ongoing operating results.
  • Gain on business divestiture: In the second quarter of fiscal 2019, the company entered into a transaction pursuant to which it sold membership interest in certain of its subsidiaries that own leasehold interests in projects subject to sale-leaseback financing arrangements. In connection with this sale, the company recognized a gain relating to this business divestiture. In the third quarter of fiscal 2018, the company entered into a transaction pursuant to which the company sold certain assets and intellectual property related to the production of microinverters for purchase consideration comprised of both cash and stock. In connection with this sale, the company recognized a gain relating to this business divestiture. Management believes that it is appropriate to exclude both of these gains from the company's non-GAAP results as it is not reflective of ongoing operating results.
  • Litigation: The company may be involved in various litigations, claims and proceedings that result in payments or recoveries from such proceedings. The company excludes any gains or losses on such litigation recoveries or payments from the non-GAAP results as it is not reflective of ongoing operating results.
  • Transaction-related costs: In connection with material non-recurring transactions such as acquisition or divestiture of a business, the company incurred transaction costs including legal and accounting fees. Management believes that it is appropriate to exclude these costs from the company's non-GAAP results as it is not reflective of ongoing operating results.
  • Business reorganization costs: In connection with the reorganization of our business into an upstream and downstream, and subsequent announcement of the separation transaction to separate the Company into two independent, and publicly traded companies, we incurred and expect to continue to incur in upcoming quarters, non-recurring charges on third-party legal and consulting expenses to close the separation transaction. The company believes that it is appropriate to exclude these from company's non-GAAP results as it is not reflective of ongoing operating results.
  • Non-cash interest expense: The company incurs non-cash interest expense related to the amortization of items such as original issuance discounts on its debt.  The company excludes non-cash interest expense because the expense does not reflect its financial results in the period incurred. Management believes that this adjustment for non-cash interest expense provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without non-cash interest expense.
  • Restructuring charges: The company incurs 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. The company believes that it is appropriate to exclude these from company's 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. The company's non-GAAP tax amount is based on estimated cash tax expense and reserves. The company forecasts its 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 the company's 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.
  • Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in addition to adjustments described above, the company excludes 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


TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,

Dec. 30,


Dec. 29,


Dec. 30,



2019


2019

2018


2019


2018

GAAP revenue


$  603,761


$  475,958

$   456,837


$  1,864,225


$  1,726,085

Adjustments based on IFRS:










8point3


-


-

-


-


(8,588)

Legacy utility and power plant projects


(44)


(65)

(691)


(303)


(4,145)

Legacy sale-leaseback transactions


-


-

69,254


-


101,581

Other adjustments:










Construction revenue on solar services contracts


3,235


15,790

-


128,144


-

Non-GAAP revenue


$  606,952


$  491,683

$   525,400


$  1,992,066


$  1,814,933





















Adjustments to Gross Profit (Loss) / Margin:












THREE MONTHS ENDED


TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,

Dec. 30,


Dec. 29,


Dec. 30,



2019


2019

2018


2019


2018

GAAP gross profit (loss)


$    95,139


$    48,251

$      (7,571)


$     125,905


$   (297,081)

Adjustments based on IFRS:










8point3


-


-

-


-


(8,337)

Legacy utility and power plant projects


-


(7)

(569)


993


(1,244)

Legacy sale-leaseback transactions


(75)


(181)

6,132


(4,763)


242

Other adjustments:










Business process improvement costs


1,091


2,279

-


3,370


-

Construction revenue on solar service contracts


1,966


1,160

-


20,018


-

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


(435)


(511)

(2,163)


(1,703)


(14,847)

Impairment of property, plant and equipment


-


-

-


-


355,107

Cost of above-market polysilicon


27,549


23,878

37,231


126,805


87,228

Litigation


(2,515)


-

-


(2,515)


-

Stock-based compensation expense


1,559


1,522

1,236


4,382


4,996

Amortization of intangible assets


1,783


1,783

1,889


7,135


8,966

Depreciation of idle equipment 


-


-

-


-


721

Non-GAAP gross profit


$  126,062


$    78,174

$      36,185


$     279,627


$     135,751











GAAP gross margin (%)


15.8%


10.1%

-1.7%


6.8%


-17.2%

Non-GAAP gross margin (%)


20.8%


15.9%

6.9%


14.0%


7.5%





















Adjustments to Net income (loss):












THREE MONTHS ENDED


TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,

Dec. 30,


Dec. 29,


Dec. 30,



2019


2019

2018


2019


2018

GAAP net income (loss) attributable to stockholders


$      5,440


$  (15,017)

$ (158,174)


$        22,159


$   (811,091)

Adjustments based on IFRS:










8point3


-


-

-


-


(8,485)

Legacy utility and power plant projects


-


(7)

(569)


993


(1,244)

Legacy sale-leaseback transactions


(75)


(181)

10,984


5,680


18,802

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


(28,250)


(27,595)

150


(156,345)


6,375

Other adjustments:










Business process improvements costs


1,091


2,279

-


3,370


-

Construction revenue on solar services contracts


1,966


1,160

-


(7,012)


-

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


(3,366)


5,135

81,273


25,636


227,507

Impairment of property, plant and equipment


4,053


-

-


4,053


369,168

Cost of above-market polysilicon


27,549


23,878

37,231


126,805


87,228

Litigation


(2,509)


-

-


(2,509)


-

Stock-based compensation expense


8,006


6,992

6,424


26,934


28,215

Amortization of intangible assets


1,783


1,783

1,889


7,135


8,966

Depreciation of idle equipment 


-


-

-


-


721

Gain on business divestiture


-


-

-


(143,400)


(59,347)

Transaction-related costs


1,723


976

(3,142)


5,294


17,727

Business reorganization costs


10,696


6,066

1,330


23,567


1,330

Non-cash interest expense


3


10

10


33


68

Restructuring charges


8,039


4,283

(1,107)


14,110


17,497

Tax effect


(384)


880

(6,605)


1,345


(4,797)

Non-GAAP net loss attributable to stockholders


$    35,765


$    10,642

$   (30,306)


$     (42,152)


$   (101,360)





















Adjustments to Net income (loss) per diluted share:












THREE MONTHS ENDED


TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,

Dec. 30,


Dec. 29,


Dec. 30,



2019


2019

2018


2019


2018

Net income (loss) per diluted share










Numerator:










GAAP net income (loss) available to common stockholders


$      5,440


$  (15,017)

$ (158,174)


$        22,159


$   (811,091)

          GAAP net income (loss) available to common stockholders
 


$      5,440


$  (15,017)

$ (158,174)


$        22,159


$   (811,091)

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


$    35,765


$    10,642

$   (30,306)


$     (42,152)


$   (101,360)











Denominator:










GAAP weighted-average shares


152,439


142,553

141,136


144,796


140,825

Effect of dilutive securities:










Restricted stock units


3,565


-

-


2,729


-

GAAP dilutive weighted-average common shares:


156,004


142,553

141,136


147,525


140,825











Non-GAAP weighted-average shares1


152,439


142,533

141,136


144,796


140,825

Effect of dilutive securities:










Restricted stock units


3,565


4,826

-


-


-

Non-GAAP weighted-average shares1


156,004


147,379

141,136


144,796


140,835











GAAP net income (loss) per diluted share


$         0.03


$      (0.11)

$        (1.12)


$            0.15


$          (5.76)

Non-GAAP net loss per diluted share


$         0.23


$         0.07

$        (0.21)


$          (0.29)


$          (0.72)











1In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 0.75%, 0.875%, and 4.0% debentures if the debentures are considered converted in the calculation of net income (loss) 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


TWELVE MONTHS ENDED



Dec. 29,


Sep. 29,

Dec. 30,


Dec. 29,


Dec. 30,



2019


2019

2018


2019


2018

GAAP net income (loss) attributable to stockholders


$      5,440


$  (15,017)

$ (158,174)


$        22,159


$   (811,091)

Adjustments based on IFRS:










8point3


-


-

-


-


(8,485)

Legacy utility and power plant projects


-


(7)

(569)


993


(1,244)

Legacy sale-leaseback transactions


(75)


(181)

10,984


5,680


18,802

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


(28,250)


(27,595)

150


(156,345)


6,375

Other adjustments:










Business process improvement costs


1,091


2,279

-


3,370


-

Construction revenue on solar services contracts


1,966


1,160

-


(7,012)


-

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


(3,366)


5,135

81,273


25,636


227,507

Impairment of property, plant and equipment


4,053


-

-


4,053


369,168

Cost of above-market polysilicon


27,549


23,878

37,231


126,805


87,228

Litigation


(2,509)


-

-


(2,509)


-

Stock-based compensation expense


8,006


6,992

6,424


26,934


28,215

Amortization of intangible assets


1,783


1,783

1,889


7,135


8,966

Depreciation of idle equipment 


-


-

-


-


721

Gain on business divestiture


-


-

-


(143,400)


(59,347)

Transaction-related costs


1,723


976

(3,142)


5,294


17,727

Business reorganization costs


10,696


6,066

1,330


23,567


1,330

Non-cash interest expense


3


10

10


33


68

Restructuring charges


8,039


4,283

(1,107)


14,110


17,497

Cash interest expense, net of interest income


9,229


9,624

24,584


40,207


86,394

Provision for income taxes


9,388


5,378

(8,379)


26,631


1,010

Depreciation


16,773


17,205

21,054


74,445


120,367

Adjusted EBITDA


$    71,539


$    41,969

$      13,558


$        97,786


$     111,208

 

FY 2020 GUIDANCE

(in thousands except percentages)

Q1 2020

FY 2020

Revenue (GAAP)

$435,000-$470,000

$2,100,000-$2,300,000

Revenue (non-GAAP)

$435,000-$470,000

$2,100,000-$2,300,000

Gross margin (GAAP)

3% - 6%

N/A

Gross margin (non-GAAP)1

9% - 12%

N/A

Net loss (GAAP)

$(85,000)-$(70,000)

$(195,000)-$(145,000)

Adjusted EBITDA2

$(15,000)-$0

$125,000-$175,000


1.

Estimated non-GAAP amounts above for Q1 2020 include net adjustments that increase gross margin by approximately $22 million related to cost of above-market polysilicon, $1 million related to stock-based compensation expense, and $2 million related to amortization of intangible assets.



2.

Estimated Adjusted EBITDA amounts above for Q1 2020 include net adjustments that decrease net loss by approximately $22 million related to cost of above-market polysilicon, $16 million related to depreciation, $10 million in business reorganization costs, $10 million related to stock-based compensation expense, $8 million related to interest expense, $2 million related to amortization of intangible assets, $1 million related to restructuring charges, and $1 million related to income taxes. Estimated non-GAAP amounts above for fiscal 2020 include net adjustments that decrease net loss by approximately $115 million related to cost of above-market polysilicon, $64 million related to depreciation, $40 million related to stock-based compensation expense, $37 million related to interest expense,  $37 million related to business reorganization charges, $15 million related to income taxes, $8 million related to amortization of intangible assets, and $4 million related to restructuring charges.



 













































































SUNPOWER CORPORATION




(In thousands, except percentages)




THREE MONTHS ENDED









































December 29, 2019






 Revenue 


 Gross profit / margin 


 Operating expenses 














 Net income (loss) attributable to non-controlling interests 






SunPower Energy Services


SunPower Technologies


Intersegment eliminations


SunPower Energy Services


SunPower Technologies


Intersegment eliminations



 Research and
development 


 Sales, general
and administrative 


 Restructuring charges 


 Loss on sale and impairment of residential lease assets 


 Other income (expense), net 


 Provision for income taxes 


 Equity in earnings of unconsolidated investees 




GAAP


$                    352,226


$                  434,708


$             (183,173)


$               45,528


12.9%


$                  65,345


15.0%


$            (15,734)

















$                      5,440




Adjustments based on IFRS:





































Legacy utility and power plant projects


-


(44)


-


-




-




-



-


-


-


-


-


-


-


-




Legacy sale-leaseback transactions


-


-


-


(75)




-




-



-


-


-


-


-


-


-


(75)




Mark-to-market gain on equity investments


-


-


-


-




-




-



-


-


-


-


(29,250)


-


1,000


(28,250)




Other adjustments:





































Business process improvement costs


-


-


-


-




1,091




-



-


-


-


-


-


-


-


1,091




Loss on sale and impairment of residential lease assets


-


-


-


(435)




-




-



-


-


-


(2,931)


-


-


-


(3,366)




Construction revenue on solar services contracts


3,235


-


-


1,966




-




-



-


-


-


-


-


-


-


1,966




Impairment of property, plant & equipment


-


-


-


-




-




-



-


-


-


-


-


-


4,053


4,053




Cost of above-market polysilicon


-


-


-


-




29,181




(1,632)



-


-


-


-


-


-


-


27,549




Litigation


-


-


-


709




(3,224)




-



-


6


-


-


-


-


-


(2,509)




Stock-based compensation expense


-


-


-


1,020




539




-



824


5,623


-


-


-


-


-


8,006




Amortization of intangible assets


-


-


-


-




1,783




-



-


(0)


-


-


-


-


-


1,783




Business reorganization costs


-


-


-


-




-




-



569


10,127


-


-


-


-


-


10,696




Transaction-related costs


-


-


-


-




-




-



-


1,723


-


-


-


-


-


1,723




Non-cash interest expense


-


-


-


-




-




-



-


3


-


-


-


-


-


3




Restructuring charges


-


-


-


-




-




-



-


-


8,039


-


-


-


-


8,039




Tax effect


-


-


-


-




-




-



-


-


-


-


-


(384)


-


(384)




Non-GAAP


$                    355,461


$                  434,664


$             (183,173)


$               48,713


13.7%


$                  94,715


21.8%


$            (17,366)

















$                    35,765
















































































September 29, 2019




 Revenue 


 Gross profit / margin 


 Operating expenses 













SunPower Energy Services


SunPower Technologies


Intersegment eliminations


SunPower Energy Services


SunPower Technologies


Intersegment eliminations



 Research and
development 


 Sales, general
and administrative 


 Restructuring charges 


 Loss on sale and impairment of residential lease assets 


 Other income (expense), net 


 Benefit from income taxes 


Equity in earnings of unconsolidated investees


 Loss attributable to non-controlling interests 


 Net income (loss) attributable to stockholders 


GAAP


$                    277,688


$                  333,896


$             (135,626)


$               29,271


10.5%


$                  18,603


5.6%


$                    377



















$                   (15,017)


Adjustments based on IFRS:





































Legacy utility and power plant projects


-


(65)


-


(7)




-




-



-


-


-


-


-


-


-


-


(7)


Legacy sale-leaseback transactions


-


-


-


(181)




-




-



-


-


-


-


-


-


-


-


(181)


Mark-to-market gain on equity investments


-


-


-


-




-




-



-


-


-


-


(28,548)


-


953


-


(27,595)


Other adjustments:





































Business process improvement costs


-


-


-


-




2,279




-



-


-


-


-


-


-


-


-


2,279


Loss on sale and impairment of residential lease assets


-


-


-


(511)




-




-



-


-


-


10,756


-


-


-


(5,110)


5,135


Construction revenue on solar services contracts


15,790


-


-


1,160




-




-



-


-


-


-


-


-


-


-


1,160


Cost of above-market polysilicon


-


-


-


-




29,633




(5,755)



-


-


-


-


-


-


-


-


23,878


Stock-based compensation expense


-


-


-


741




781




-



903


4,567


-


-


-


-


-


-


6,992


Amortization of intangible assets


-


-


-


-




1,783




-



-


-


-


-


-


-


-


-


1,783


Business reorganization costs


-


-


-


-




-




-



-


6,066


-


-


-


-


-


-


6,066


Transaction-related costs


-


-


-


-




-




-



-


976


-


-


-


-


-


-


976


Non-cash interest expense


-


-


-


-




-




-



-


10


-


-


-


-


-


-


10


Restructuring charges


-


-


-


-




-




-



-


-


4,283


-


-


-


-


-


4,283


Tax effect


-


-


-


-




-




-



-


-


-


-


-


880


-


-


880


Non-GAAP


$                    293,478


$                  333,831


$             (135,626)


$               30,473


10.4%


$                  53,079


15.9%


$              (5,378)



















$                     10,642



















































































































December 30, 2018





 Revenue 


 Gross profit / margin 


 Operating expenses 














SPES


SPT


Intersegment revenue eliminations


SPES


SPT


Intersegment revenue eliminations



 Research and
development 


 Sales, general
and administrative 


 Restructuring charges 


 Loss on sale and impairment and sale of residential lease asset 


 Other income (expense), net 


 Benefit from  income taxes 


 Loss attributable to non-controlling interests 


 Net income (loss) attributable to stockholders 



GAAP


$                    265,427


$                  277,256


$                (85,846)


$               20,126


7.6%


$                (19,616)


-7.1%


$              (8,081)

















$               (158,174)




Adjustments based on IFRS:





































Legacy utility and power plant projects


(240)


(451)


-


(472)




(97)




-



-


-


-


-


-


-


-


(569)




Legacy sale-leaseback transactions


69,254


-


-


6,113




19




-



-


-


-


-


4,852


-


-


10,984




Mark-to-market gain on equity investments


-


-


-


-




-




-



-


-


-


-


150


-


-


150




Other adjustments:





































Loss on sale and impairment of residential lease assets


-


-


-


(2,163)




-




-



-


-


-


81,086


-


-


2,350


81,273




Cost of above-market polysilicon


-


-


-


2,055




35,176




-



-


-


-


-


-


-


-


37,231




Stock-based compensation expense


-


-


-


610




626




-



907


4,281


-


-


-


-


-


6,424




Amortization of intangible assets


-


-


-


616




1,273




-



-


-


-


-


-


-


-


1,889




Business reorganization costs


-


-


-


-




-




-



-


1,330


-


-


-


-


-


1,330




Acquisition-related and other costs


-


-


-


-




-




-



-


(3,142)


-


-


-


-


-


(3,142)




Non-cash interest expense


-


-


-


-




-




-



-


10


-


-


-


-


-


10




Restructuring charges


-


-


-


-




-




-



-


-


(1,107)


-


-


-


-


(1,107)




Tax effect


-


-


-


-




-




-



-


-


-


-


-


(6,605)


-


(6,605)




Non-GAAP


$                    334,441


$                  276,805


$                (85,846)


$               26,885


8.0%


$                  17,381


6.3%


$              (8,081)

















$                 (30,306)


























































































































































TWELVE MONTHS ENDED








































December 29, 2019



 Revenue 


 Gross profit / margin 


 Operating expenses 


 Other income (expense), net 


 Benefit from (provision for)  income taxes 


 Equity in losses of unconsolidated investees 


 Loss attributable to non-controlling interests 

 Net income (loss) attributable to stockholders 



SunPower Energy Services


SunPower Technologies


Intersegment eliminations


SunPower Energy Services


SunPower Technologies


Intersegment eliminations



 Research and
development 


 Sales, general
and administrative 


 Restructuring charges 


 Loss on sale and impairment of residential lease assets 


 Gain on business divestiture 





GAAP


$                1,019,861


$              1,314,379


$             (470,015)


$             104,406


10.2%


$                  29,138


2.2%


$              (7,639)




















$                         22,159

Adjustments based on IFRS:





































8point3


-


-


-


-




-




-



-


-


-


-


-


-


-


-


-

-

Legacy utility and power plant projects


-


(303)


-


118




875




-



-


-


-


-


-


-


-


-


-

993

Legacy sale-leaseback transactions


-


-


-


(4,764)




1




-



-


-


-


-


-


10,443


-


-


-

5,680

Mark-to-market gain on equity investments


-


-


-


-




-




-



-


-


-


-


-


(158,298)


-


1,953


-

(156,345)

Other adjustments:


-


-


-


-




-




-



-


-


-


-


-


-


-


-


-


Business process improvement costs


-


-


-


-




3,370




-



-


-


-


-


-


-


-


-


-

3,370

Intersegment mark-up


-


-


-


-




-




-



-


-


-


-


-


-


-


-


-

-

Loss on sale and impairment of residential lease assets


-


-


-


(1,703)




-




-



-


-


-


33,779


-


-


-


-


(6,440)

25,636

Construction revenue on solar services contracts


128,144


-


-


20,018




-




-



-


-


-


-


-


-


-


-


(27,030)

(7,012)

Cost of above-market polysilicon


-


-


-


-




132,117




(5,312)



-


-


-


-


-


-


-


-


-

126,805

Litigation


-


-


-


709




(3,224)




-



-


6


-


-


-


-


-


-


-

(2,509)

Impairment of property, plant & equipment


-


-


-


-




-




-



-


-


-


-


-


-


-


4,053


-

4,053

Stock-based compensation expense


-


-


-


2,389




1,993




-



3,199


19,353


-


-


-


-


-


-


-

26,934

Amortization of intangible assets


-


-


-


-




7,135




-



-


(0)


-


-


-


-


-


-


-

7,135

Gain on business divestiture


-


-


-


-




-




-



-


-


-


-


(143,400)


-


-


-


-

(143,400)

Business reorganization costs


-


-


-


-




-




-



1,346


22,221


-


-


-


-


-


-


-

23,567

Transaction-related costs


-


-


-


-




-




-



-


5,294


-


-


-


-


-


-


-

5,294

Non-cash interest expense


-


-


-


-




-




-



-


33


-


-


-


-


-


-


-

33

Restructuring charges


-


-


-


-




-




-



-


-


14,110


-


-


-


-


-


-

14,110

Tax effect


-


-


-


-




-




-



-


-


-


-


-


-


1,345


-


-

1,345

Non-GAAP


$                1,148,005


$              1,314,076


$             (470,015)


$             121,173


10.6%


$                171,405


13.0%


$            (12,951)




















$                      (42,152)


















































































































December 30, 2018



 Revenue 


 Gross profit / margin 


 Operating expenses 


 Other income (expense), net 


 Benefit from (provision for) income taxes 


 Equity in earnings of unconsolidated investees 


 Loss attributable to non-controlling interests 

 Net income (loss) attributable to stockholders 



SPES


SPT


Intersegment revenue eliminations


SPES


SPT


Intersegment revenue eliminations



 Research and
development 


 Sales, general
and administrative 


 Restructuring charges 


 Impairment and sale of residential lease asset 


 Gain on business divestitures 





GAAP


$                1,045,614


$              1,069,010


$             (388,539)


$             156,204


14.9%


$             (427,899)


-40.0%


$            (25,386)




















$                    (811,091)

Adjustments based on IFRS:





































8point3


(2,400)


(6,188)


-


(2,149)




(6,188)




-



-


-


-


-


-


-


-


(148)


-

(8,485)

Legacy utility and power plant projects


(828)


(3,317)


-


(787)




(457)




-



-


-


-


-


-


-


-


-


-

(1,244)

Sale-leaseback transactions


101,581


-


-


661




(419)




-



-


-


-


-


-


18,560


-


-


-

18,802

Mark-to-market loss on equity investments


-


-


-


-




-




-



-


-


-


-


-


6,375


-


-


-

6,375

Other adjustments:





































Loss on sale and impairment and sale of residential lease assets


-


-


-


(14,847)




-




-



-


-


-


251,984


-


-


-


-


(9,630)

227,507

Impairment of property, plant and equipment


-


-


-


33




355,074




-



12,832


1,229


-


-


-


-


-


-


-

369,168

Cost of above-market polysilicon


-


-


-


(3,795)




91,023




-



-


-


-


-


-


-


-


-


-

87,228

Stock-based compensation expense


-


-


-


2,370




2,626




-



5,496


17,723


-


-


-


-


-


-


-

28,215

Amortization of intangible assets


-


-


-


4,109




4,857




-



-


-


-


-


-


-


-


-


-

8,966

Business reorganization costs


-


-


-


-




-




-



-


1,330


-


-


-


-


-


-


-

1,330

Depreciation of idle equipment 


-


-


-


289




432




-



-


-


-


-


-


-


-


-


-

721

Gain on business divestitures


-


-


-


-




-




-



-


-


-


-


(59,347)


-


-


-


-

(59,347)

Acquisition-related and other costs


-


-


-


-




-




-



-


17,727


-


-


-


-


-


-


-

17,727

Non-cash interest expense


-


-


-


-




-




-



7


61


-


-


-


-


-


-


-

68

Restructuring expense


-


-


-


-




-




-



-


-


17,497


-


-


-


-


-


-

17,497

Tax effect


-


-


-


-




-




-



-


-


-


-


-


-


(4,797)


-


-

(4,797)

Non-GAAP


$                1,143,967


$              1,059,505


$             (388,539)


$             142,088


12.4%


$                  19,049


1.8%


$            (25,386)




















$                    (101,360)





 

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SOURCE SunPower Corp.