SunPower Reports Second Quarter 2017 Results

SAN JOSE, Calif., Aug. 1, 2017 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its second quarter ended July 2, 2017.

SunPower Logo. (PRNewsFoto/SunPower Corp.)

 

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

2nd Quarter

2017

1st Quarter

2017

2nd Quarter

2016

GAAP revenue

$337.4

$399.1

$420.5

GAAP gross margin

4.5%

(7.8%)

9.8%

GAAP net loss

($93.8)

($134.5)

($70.0)

GAAP net loss per diluted share

($0.67)

($0.97)

($0.51)

Non-GAAP revenue1

$341.5

$429.5

$401.8

Non-GAAP gross margin1,2

12.2%

6.5%

17.0%

Non-GAAP net loss1,2

($49.3)

($50.4)

($14.2)

Non-GAAP net loss per diluted share1,2

($0.35)

($0.36)

($0.10)

Adjusted EBITDA1,2

$13.5

$8.6

$45.8

Operating cash flow

($161.8)

($126.9)

($300.1)

 

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 Excludes polysilicon costs related to above market polysilicon contracts.      

"Our strong execution enabled us to meet our financial goals for the quarter despite the continued challenging industry conditions," said Tom Werner, SunPower president and CEO. "Our distributed generation business remains a key driver of our performance as demand for our complete solution products in both our residential and commercial segments remains robust. In power plant, we expect to deliver more than 500 MW of projects in the second half of this year. We are also seeing growing traction in our global SunPower® Solutions business as we booked or contracted more than 250 megawatts (MW) of agreements in the quarter. Operationally, we achieved our cost reduction targets for the quarter. Fab utilization is at 100 percent and we expect to remain fully utilized for the balance of the year. We also continued the successful ramp of our P-Series product in Mexico while starting initial P-Series production at our recently announced Chinese joint venture facility. Finally, we are benefitting from our investments in our next generation cell and module technology as we recently produced our first panels utilizing this technology on our new, leading-edge manufacturing line at our Silicon Valley research facility.     

"Strategically, we continue to believe that our restructuring program will enable us to successfully navigate the current market transition while positioning us for improved financial performance. In the near-term, our focus remains on maximizing cash flow through project sales, lower operating expenses, and the potential monetization of non-core assets. In relation to 8point3 Energy Partners, our strategic review process is continuing, but we have received significant initial interest in the acquisition of our general partnership stake or in the sale of the entire partnership. Thus, we have made the decision not to actively seek a replacement partner for First Solar and to focus our efforts on the monetization of our ownership stake in the partnership. In the event we complete a sale of our ownership stake in 8point3, we believe the proceeds will provide us with additional resources to deleverage our balance sheet and retire our 2018 convertible bonds to minimize shareholder dilution and continue to execute on our restructuring plan. Additionally, depending on market conditions, we may have the opportunity to refinance our 2018 convertible bonds as well. We have also recently offered our Boulder Solar 1 project to 8point3 and potentially will offer other Right of First Offer (ROFO) projects to the partnership as well.  In the event the partnership waives its rights to acquire these projects, we would sell them to third parties. In either case, we expect the sale of these ROFO projects to generate additional cash proceeds to fund our growth initiatives.

"Looking forward, we will continue to invest in innovative technologies and allocate resources to those areas that offer significant growth opportunities including our next generation cell and module technology, our complete solution product suite, energy storage, digital platforms and Smart Energy strategy, as we believe these initiatives will best position the company for long-term success. Also, our more focused approach to our power plant development activities will allow us to further invest in our leadership position in our distributed generation segments while building continuing momentum in our SunPower Solutions business. We expect these initiatives will improve our competitive position, strengthen our balance sheet and enable us to return to long-term sustained profitability." concluded Werner.    

"Our second quarter results reflect our ability to execute on our diversified model in a challenging industry environment while benefitting from our corporate restructuring initiatives," said Chuck Boynton, SunPower chief financial officer. "In the near term, we continue to remain focused on prudently managing our working capital and strengthening our balance sheet.  With our decision to monetize our ownership of 8point3 and expected additional non-core asset sales, we anticipate having the resources to retire our 2018 convertible bond while continuing to invest in our strategic initiatives. Given our restructuring, flexible business model and demonstrated continued support from Total, we believe we are well positioned for the future."

Second quarter fiscal 2017 non-GAAP results include net adjustments that, in the aggregate, decreased (increased) non-GAAP net loss by $44.5 million, including $2.5 million related to 8point3 Energy Partners, $2.4 million related to utility and power plant projects, $8.6 million related to stock-based compensation expense, $4.2 million related to amortization of intangible assets, $5.0 million related to restructuring expense, $21.8 million related to cost of above-market polysilicon, $(0.4) million related to other adjustments, and $0.4 million related to tax effect.

Financial Outlook

The company is updating its fiscal year 2017 revenue and gigawatt (GW) deployed guidance. The company now expects revenue of $1.9 billion to $2.1 billion on a GAAP basis and $2.1 billion to $2.3 billion on a non-GAAP basis with GW deployed in the range of 1.3 GW to 1.45 GW. This change is due to project schedule adjustments in Mexico to allow for improved project economics. Additionally, the company now expects lower than forecasted GAAP restructuring charges which will be in the range of $20 million to $60 million for the year. The balance of the company's previously disclosed fiscal year 2017 guidance remains unchanged: non-GAAP operational expenses of less than $350 million and capital expenditures of approximately $120 million. Additionally, the company continues to expect to generate positive operating cash flow through the end of fiscal year 2017 and exit the year with approximately $300 million in cash excluding any proceeds from the potential divestiture of non-core assets. The company is also forecasting positive Adjusted EBITDA for the full year 2017 and continues to believe that cash flow and liquidity remain the key evaluation metrics for investors in the near term.

The company's third quarter fiscal 2017 GAAP guidance is as follows: revenue of $300 million to $350 million, gross margin of negative 3 percent to negative 1 percent and net loss of $120 million to $100 million. Third quarter 2017 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to real estate accounting as well as the impact of charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $320 million to $370 million, gross margin of 5 percent to 7 percent, Adjusted EBITDA of breakeven to $20 million and megawatts deployed in the range of 405 MW to 435 MW.

The company expects to deliver more than 500 MW of power plant projects in the second half of the year with a significant majority to be recognized in the fourth quarter of 2017.

The company will host a conference call for investors this afternoon to discuss its second quarter 2017 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 first quarter 2017 performance on the Events and Presentations section of SunPower's Investor Relations page at http://investors.sunpower.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.

About SunPower

With more than 30 years of proven experience, SunPower is a global leader in solar innovation and sustainability. Our unique approach emphasizes the seamless integration of advanced SunPower technologies, delivering The Power of One® complete solar solutions and lasting customer value. SunPower provides outstanding service and impressive electricity cost savings for residential, commercial and power plant customers. At SunPower, we are passionately committed to changing the way our world is powered. And as we continue shaping the future of Smart Energy, we are guided by our legacy of innovation, optimism, perseverance and integrity. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, North America and South America. Since 2011, we've been majority-owned by Total, the fourth largest publicly-listed energy company in the world. 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) anticipated project timelines; (b) expected fab utilization; (c) our expectations for the timing, success, and financial impact of our restructuring plan and associated initiatives, including plans to sell projects and monetize certain non-core assets, and the impact of these initiatives on our financial performance, cash flow, and operating expenses; (c) the outcome of our ongoing strategic review of options for 8point3, our ability to complete a sale of our ownership stake in 8point3, and our plans for the proceeds of such a sale; (d) our ability to complete planned project sales, deleverage our balance sheet, retire our 2018 convertible bonds, strengthen our balance sheet, and generate additional cash proceeds to fund our planned growth initiatives; (e) our plans to invest in technologies and strategic initiatives and allocate resources; (f) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (g) our expectations regarding future support from Total; (h) our expectations for the solar industry and the markets we serve, including market conditions, recovery, and long-term prospects for improvement;  (i) full year fiscal 2017 guidance, including GAAP and non-GAAP revenue,  gigawatts deployed, operational expenditures, capital expenditures, restructuring charges, cash flow and ending cash, and Adjusted EBITDA; and (j) our third quarter fiscal 2017 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, cash flow, and MW deployed. 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) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) regulatory changes and the availability of economic incentives promoting use of solar energy; (4) challenges inherent in constructing certain of our large projects; (5) 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; (6) fluctuations in our operating results; (7) appropriately sizing our manufacturing capacity and containing manufacturing difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful, or that we may not be able to successfully monetize our interest in 8point3 Energy Partners; (10) fluctuations or declines in the performance of our solar panels and other products and solutions; and (11) our ability to identify and successfully implement concrete actions to meet our cost reduction targets, reduce capital expenditures, and implement our restructuring plan and associated initiatives, including plans to sell projects, monetize assets, streamline our business and focus investment and resources.  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.

©2017 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) 

       
 

Jul. 2,

 

Jan. 1,

 

2017

 

2017

Assets

     

Current assets:

     

Cash and cash equivalents

$     327,281

 

$     425,309

Restricted cash and cash equivalents, current portion

20,313

 

33,657

Accounts receivable, net

195,871

 

219,638

Costs and estimated earnings in excess of billings

19,623

 

32,780

Inventories

444,990

 

401,707

Advances to suppliers, current portion

106,820

 

111,479

Project assets - plants and land, current portion

373,751

 

374,459

Prepaid expenses and other current assets

175,005

 

315,670

Total current assets

1,663,654

 

1,914,699

       

Restricted cash and cash equivalents, net of current portion

53,429

 

55,246

Restricted long-term marketable securities

4,860

 

4,971

Property, plant and equipment, net

1,049,856

 

1,027,066

Solar power systems leased and to be leased, net

677,515

 

621,267

Project assets - plants and land, net of current portion

40,771

 

33,571

Advances to suppliers, net of current portion

145,154

 

173,277

Long-term financing receivables, net

569,848

 

507,333

Goodwill and other intangible assets, net

36,713

 

44,218

Other long-term assets

114,920

 

185,519

Total assets

$  4,356,720

 

$  4,567,167

       

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

$     425,909

 

$     540,295

Accrued liabilities

243,254

 

391,226

Billings in excess of costs and estimated earnings

11,707

 

77,140

Short-term debt

127,565

 

71,376

Convertible debt, current portion

299,235

 

-

Customer advances, current portion

41,261

 

10,138

Total current liabilities

1,148,931

 

1,090,175

       

Long-term debt

550,973

 

451,243

Convertible debt

815,503

 

1,113,478

Customer advances, net of current portion

74,331

 

298

Other long-term liabilities

785,549

 

721,032

Total liabilities

3,375,287

 

3,376,226

       

Redeemable noncontrolling interests in subsidiaries

114,045

 

103,621

       

Equity:

     

Preferred stock

-

 

-

Common stock

139

 

139

Additional paid-in capital

2,426,134

 

2,410,395

Accumulated deficit

(1,492,264)

 

(1,218,681)

Accumulated other comprehensive loss

(6,635)

 

(7,238)

Treasury stock, at cost

(180,998)

 

(176,783)

Total stockholders' equity

746,376

 

1,007,832

Noncontrolling interests in subsidiaries

121,012

 

79,488

Total equity

867,388

 

1,087,320

Total liabilities and equity

$  4,356,720

 

$  4,567,167

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

                       
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

                       

Revenue:

                     

Residential 

   

$    157,125

 

$      136,031

 

$    177,715

 

$       293,156

 

$      329,522

Commercial

   

100,105

 

108,263

 

97,846

 

208,368

 

150,087

Power Plant

   

80,216

 

154,782

 

144,891

 

234,998

 

325,718

Total revenue

   

337,446

 

399,076

 

420,452

 

736,522

 

805,327

Cost of revenue:

                     

Residential 

   

130,987

 

120,757

 

138,959

 

251,744

 

257,119

Commercial

   

97,530

 

110,629

 

89,523

 

208,159

 

134,749

Power Plant

   

93,694

 

198,622

 

150,676

 

292,316

 

320,628

Total cost of revenue

   

322,211

 

430,008

 

379,158

 

752,219

 

712,496

Gross margin

   

15,235

 

(30,932)

 

41,294

 

(15,697)

 

92,831

Operating expenses:

                     

Research and development

   

19,754

 

20,515

 

31,411

 

40,269

 

64,117

Selling, general and administrative

   

68,703

 

67,403

 

84,683

 

136,106

 

182,474

Restructuring charges

   

4,969

 

9,790

 

117

 

14,759

 

213

  Total operating expenses

   

93,426

 

97,708

 

116,211

 

191,134

 

246,804

Operating loss

   

(78,191)

 

(128,640)

 

(74,917)

 

(206,831)

 

(153,973)

Other income (expense), net:

                     

Interest income

   

387

 

938

 

806

 

1,325

 

1,503

Interest expense

   

(22,370)

 

(20,769)

 

(13,950)

 

(43,139)

 

(26,831)

Other, net

   

(15,744)

 

(2,190)

 

(5,822)

 

(17,934)

 

(12,054)

  Other expense, net

   

(37,727)

 

(22,021)

 

(18,966)

 

(59,748)

 

(37,382)

Loss before income taxes and equity in earnings of unconsolidated investees

   

(115,918)

 

(150,661)

 

(93,883)

 

(266,579)

 

(191,355)

Provision for income taxes

   

(2,353)

 

(2,031)

 

(6,648)

 

(4,384)

 

(9,829)

Equity in earnings of unconsolidated investees

   

5,449

 

1,052

 

8,350

 

6,501

 

7,586

Net loss  

   

(112,822)

 

(151,640)

 

(92,181)

 

(264,462)

 

(193,598)

  Net loss attributable to noncontrolling interests and redeemable noncontrolling interests

   

19,062

 

17,161

 

22,189

 

36,223

 

38,197

Net loss attributable to stockholders

   

$    (93,760)

 

$    (134,479)

 

$    (69,992)

 

$     (228,239)

 

$   (155,401)

                       

Net loss per share attributable to stockholders:

                     

- Basic

   

$         (0.67)

 

$           (0.97)

 

$         (0.51)

 

$            (1.64)

 

$          (1.13)

- Diluted

   

$         (0.67)

 

$           (0.97)

 

$         (0.51)

 

$            (1.64)

 

$          (1.13)

                       

Weighted-average shares:

                     

- Basic

   

139,448

 

138,902

 

138,084

 

139,175

 

137,644

- Diluted

   

139,448

 

138,902

 

138,084

 

139,175

 

137,644

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                     
 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

   

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

   

2017

 

2017

 

2016

 

2017

 

2016

                     

Cash flows from operating activities:

                   

Net loss

 

$   (112,822)

 

$   (151,640)

 

$      (92,181)

 

$     (264,462)

 

$    (193,598)

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

                   

Depreciation and amortization

 

45,269

 

42,084

 

40,898

 

87,353

 

83,015

Stock-based compensation

 

8,606

 

7,375

 

16,475

 

15,981

 

32,995

Non-cash interest expense

 

4,777

 

2,958

 

309

 

7,735

 

655

Impairment of equity method investment

 

8,607

 

-

 

-

 

8,607

 

-

Dividend from 8point3 Energy Partners LP

 

7,409

 

7,192

 

-

 

14,601

 

-

Equity in earnings of unconsolidated investees

 

(5,449)

 

(1,052)

 

(8,350)

 

(6,501)

 

(7,586)

Deferred income taxes

 

1,058

 

227

 

1,701

 

1,285

 

939

Other, net

 

(617)

 

4,777

 

909

 

4,160

 

1,799

Changes in operating assets and liabilities, net of effect of acquisitions:

                   

Accounts receivable

 

(27,224)

 

51,669

 

(35,856)

 

24,445

 

(23,295)

Costs and estimated earnings in excess of billings

 

1,859

 

11,298

 

23,826

 

13,157

 

6,301

Inventories

 

(29,772)

 

(40,004)

 

(96,799)

 

(69,776)

 

(115,047)

Project assets

 

(97,022)

 

37,192

 

(254,007)

 

(59,830)

 

(433,383)

Prepaid expenses and other assets

 

53,852

 

85,251

 

94,060

 

139,103

 

48,619

Long-term financing receivables, net

 

(31,872)

 

(30,643)

 

(51,108)

 

(62,515)

 

(95,119)

Advances to suppliers

 

19,081

 

13,701

 

28,656

 

32,782

 

40,569

Accounts payable and other accrued liabilities

 

(16,422)

 

(198,119)

 

82,051

 

(214,541)

 

12,077

Billings in excess of costs and estimated earnings

 

(4,411)

 

(61,022)

 

(49,915)

 

(65,433)

 

(23,049)

Customer advances

 

13,294

 

91,863

 

(760)

 

105,157

 

(5,884)

Net cash used in operating activities

 

(161,799)

 

(126,893)

 

(300,091)

 

(288,692)

 

(669,992)

Cash flows from investing activities:

                   

Purchases of property, plant and equipment

 

(17,246)

 

(27,877)

 

(46,281)

 

(45,123)

 

(93,325)

Cash paid for solar power systems, leased and to be leased

 

(22,811)

 

(18,217)

 

(22,918)

 

(41,028)

 

(46,156)

Cash paid for solar power systems

 

(3,407)

 

(4,605)

 

(2,282)

 

(8,012)

 

(2,282)

Payments to 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio

 

-

 

-

 

130

 

-

 

(9,838)

Dividend from equity method investee

 

1,421

 

-

 

-

 

1,421

 

-

Cash paid for investments in unconsolidated investees

 

(1,461)

 

(10,142)

 

(557)

 

(11,603)

 

(10,309)

Net cash used in investing activities

 

(43,504)

 

(60,841)

 

(71,908)

 

(104,345)

 

(161,910)

Cash flows from financing activities:

                   

Proceeds from bank loans and other debt

 

90,637

 

110,763

 

-

 

201,400

 

-

Repayment of bank loans and other debt

 

(99,913)

 

(129,027)

 

(162)

 

(228,940)

 

(7,887)

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

 

10,062

 

20,580

 

24,889

 

30,642

 

53,228

Repayment of non-recourse residential financing

 

(1,726)

 

(1,298)

 

(1,101)

 

(3,024)

 

(2,166)

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

 

47,595

 

49,030

 

33,083

 

96,625

 

57,165

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

 

(4,691)

 

(3,763)

 

(1,596)

 

(8,454)

 

(6,905)

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

 

104,843

 

121,818

 

354,052

 

226,661

 

433,492

Repayment of non-recourse power plant and commercial financing

 

(3,057)

 

(28,964)

 

(51)

 

(32,021)

 

(37,352)

Purchases of stock for tax withholding obligations on vested restricted stock

 

(153)

 

(4,062)

 

(795)

 

(4,215)

 

(19,671)

Net cash provided by financing activities

 

143,597

 

135,077

 

408,319

 

278,674

 

469,904

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

 

386

 

788

 

(467)

 

1,174

 

307

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

 

(61,320)

 

(51,869)

 

35,853

 

(113,189)

 

(361,691)

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

 

462,343

 

514,212

 

623,220

 

514,212

 

1,020,764

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

 

$     401,023

 

$      462,343

 

$      659,073

 

$       401,023

 

$      659,073

                     

Non-cash transactions:

                   

Assignment of residential lease receivables to third parties

 

$                  7

 

$                18

 

$          1,379

 

$                  25

 

$           2,476

Costs of solar power systems, leased and to be leased, sourced from existing inventory

 

$        14,078

 

$        13,389

 

$        14,806

 

$          27,467

 

$         29,891

Costs of solar power systems, leased and to be leased, funded by liabilities

 

$          7,016

 

$          3,169

 

$          6,282

 

$            7,016

 

$           6,282

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

 

$          2,702

 

$        52,917

 

$          7,375

 

$          55,619

 

$           7,375

Property, plant and equipment acquisitions funded by liabilities

 

$        40,669

 

$        44,966

 

$        73,247

 

$          40,669

 

$         73,247

Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group

 

$          1,858

 

$          2,615

 

$                 -

 

$            4,473

 

$           8,726

Exchange of receivables for an investment in an unconsolidated investee

 

$                 -

 

$                 -

 

$          2,890

 

$                   -

 

$           2,890

Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross margin; net income (loss); net income (loss) per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). Management believes that each of these non-GAAP measures is 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 provides 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 analyses. 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; the non-GAAP measures 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, utility and power plant projects, the sale of operating lease assets, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross margin includes adjustments relating to stock-based compensation, amortization of intangible assets, non-cash interest expense, arbitration ruling, cost of above-market polysilicon, and other items, each as described below. In addition to those same adjustments, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share are adjusted for adjustments relating to restructuring expense, IPO-related costs, and the tax effect of these non-GAAP adjustments as described below. In addition to the same adjustments as non-GAAP net income (loss), Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for (benefit from) income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards ("IFRS")

The company's non-GAAP results include adjustments to recognize revenue and profit under IFRS that are consistent with the adjustments made in connection with the company's reporting process as part of its status as a consolidated subsidiary of Total S.A., a foreign public registrant which 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 revenue and profit generation performance, and assists in aligning the perspectives of our management and noncontrolling shareholders with those of Total S.A., our controlling shareholder.

  • 8point3. In 2015, 8point3 Energy Partners LP ("8point3 Energy Partners"), a joint YieldCo vehicle, was formed by the company and First Solar, Inc. ("First Solar" and, together with the company, the "Sponsors") to own, operate and acquire solar energy generation assets. Class A shares of 8point3 Energy Partners are now listed on the NASDAQ Global Select Market under the trading symbol "CAFD."  Immediately after the IPO, the company contributed a portfolio of 170 MW of its solar generation assets (the "SPWR Projects") to 8point3 Operating Company, LLC ("OpCo"), 8point3 Energy Partners' primary operating subsidiary.  In exchange for the SPWR Projects, the company received cash proceeds as well as equity interests in several 8point3 Energy Partners affiliated entities: primarily common and subordinated units representing a 40.7% stake in OpCo and a 50.0% economic and management stake in 8point3 Holding Company, LLC ("Holdings"), the parent company of the general partner of 8point3 Energy Partners and the owner of incentive distribution rights in OpCo.  Holdings, OpCo, 8point3 Energy Partners and their respective subsidiaries are referred to herein as the "8point3 Group" or "8point3."

The company includes adjustments related to the sales of projects contributed to 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 is subsequently recognized over time. With certain exceptions such as for projects already in operation, the company's revenue is equal to the fair market value of the consideration received, and cost of goods sold is equal to the net carrying value plus a partial deferral of profit proportionate with the retained equity stake. Under GAAP, these sales are 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 recognition for other projects sold to 8point3 is deferred until these projects reach commercial operations. Equity in earnings of unconsolidated investees also includes the impact of the company's share of 8point3's earnings related to sales of projects receiving sales recognition under IFRS but not GAAP.  

  • Utility and power plant projects. The company includes 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 the company's project development efforts at the time of initial project sale. Under GAAP, such projects are accounted for under real estate accounting guidance, under which no separate allocation to the company's project development efforts occurs and the amount of revenue and margin that is recognized may be limited in circumstances where the company has certain forms of continuing involvement in the project. Over the life of each project, cumulative revenue and gross margin will eventually be equivalent under both GAAP and IFRS; however, revenue and gross margin will generally be recognized earlier under IFRS. Within each project, the relationship between the adjustments to revenue and gross margins is generally consistent. However, as the company may have multiple utility and power plant projects in differing stages of progress at any given time, the relationship in the aggregate will occasionally appear otherwise.
  • Sale of operating lease assets. The company includes adjustments related to the revenue recognition on the sale of certain solar assets subject to an operating lease (or of solar assets that are leased by or intended to be leased by the third-party purchaser to another party) based on the net proceeds received from the purchaser. Under GAAP, these sales are accounted for as borrowing transactions in accordance with lease accounting guidance. Under such guidance, revenue and profit recognition is based on rental payments made by the end lessee, and the net proceeds from the purchaser are recorded as a non-recourse borrowing liability, with imputed interest expense recorded on the liability. This treatment continues until the company has transferred the substantial risks of ownership, as defined by lease accounting guidance, to the purchaser, at which point the sale is recognized.
  • Sale-leaseback transactions. The company includes adjustments related to the revenue recognition on certain sale-leaseback transactions based on the net proceeds received from the buyer-lessor. Under GAAP, these transactions are accounted for under the financing method in accordance with real estate 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 the company's incremental borrowing rate adjusted solely to prevent negative amortization.

Other Non-GAAP Adjustments

  • 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, are not reflective of ongoing operating results, and do not contribute to a meaningful evaluation of a company's past operating performance.
  • 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 expense. 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.  Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities and such costs have historically occurred infrequently. 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. As such, management believes that it is appropriate to exclude restructuring charges from the company's non-GAAP financial measures as they are not reflective of ongoing operating results or contribute to a meaningful evaluation of a company's past operating performance.
  • Arbitration ruling. On January 28, 2015, an arbitral tribunal of the International Court of Arbitration of the International Chamber of Commerce declared a binding partial award in the matter of an arbitration between First Philippine Electric Corporation ("FPEC") and First Philippine Solar Corporation ("FPSC") against SunPower Philippines Manufacturing, Ltd. ("SPML"), the Company's wholly-owned subsidiary. The tribunal found SPML in breach of its obligations under its supply agreement with FPSC, and in breach of its joint venture agreement with FPEC. The second partial and final awards dated July 14, 2015 and September 30, 2015, respectively, reduced the estimated amounts to be paid to FPEC, and on July 22, 2016, SPML entered into a settlement with FPEC and FPSC and paid a total of $50.5 million in settlement of all claims between the parties. As a result, the Company recorded its best estimate of probable loss related to this case at the time of the initial ruling and updated the estimate as circumstances warranted. As this loss is nonrecurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.
  • IPO-related costs. Costs incurred related to the IPO of 8point3 included legal, accounting, advisory, valuation, and other expenses, as well as modifications to or terminations of certain existing financing structures in preparation for the sale to 8point3.  As these costs are non-recurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.
  • Cost of above-market polysilicon. The Company has entered in previous years into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to 10 years. The prices in these supply agreements, which incorporate a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed 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 financial measures as they are not reflective of ongoing operating results and does not contribute to a meaningful evaluation of a company's past operating performance.
  • Other. The company combines amounts previously disclosed under separate captions into "Other" when amounts do not have a significant impact on the presented fiscal periods. Management believes that these adjustments provide investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.
  • 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 and non-GAAP net income 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 during the period of the following items:
    • Cash interest expense, net of interest income
    • Provision for (benefit from) income taxes
    • Depreciation

Management presents this non-GAAP financial measure to enable investors to evaluate the company's performance, including compared with the performance of other companies.

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

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

GAAP revenue

   

$      337,446

 

$      399,076

 

$      420,452

 

$       736,522

 

$      805,327

Adjustments based on IFRS:

                     

8point3

   

(223)

 

713

 

(1,400)

 

490

 

(16,574)

Utility and power plant projects

   

335

 

(23,780)

 

(40,085)

 

(23,445)

 

13,453

Sale of operating lease assets

   

-

 

-

 

10,183

 

-

 

20,586

Sale-leaseback transactions

   

3,927

 

53,478

 

12,646

 

57,405

 

12,646

Non-GAAP revenue

   

$      341,485

 

$      429,487

 

$      401,796

 

$       770,972

 

$      835,438

                       

Adjustments to Gross margin:

                     
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

GAAP gross margin

   

$        15,235

 

$      (30,932)

 

$         41,294

 

$       (15,697)

 

$         92,831

Adjustments based on IFRS:

                     

8point3

   

870

 

1,189

 

(210)

 

2,059

 

(4,852)

Utility and power plant projects

   

2,378

 

27,174

 

4,128

 

29,552

 

7,685

Sale of operating lease assets

   

-

 

-

 

2,966

 

-

 

6,078

Sale-leaseback transactions

   

(2,270)

 

(3,144)

 

2,988

 

(5,414)

 

2,988

Other adjustments:

                     

Stock-based compensation expense

   

1,052

 

1,184

 

5,464

 

2,236

 

9,589

Amortization of intangible assets

   

2,567

 

2,567

 

1,530

 

5,134

 

2,544

Non-cash interest expense

   

10

 

10

 

284

 

20

 

603

Cost of above-market polysilicon

   

21,826

 

29,815

 

15,901

 

51,641

 

28,615

Arbitration ruling

   

-

 

-

 

(5,852)

 

-

 

(5,852)

Non-GAAP gross margin

   

$        41,668

 

$         27,863

 

$         68,493

 

$          69,531

 

$      140,229

                       

GAAP gross margin (%)

   

4.5%

 

-7.8%

 

9.8%

 

-2.1%

 

11.5%

Non-GAAP gross margin (%)

   

12.2%

 

6.5%

 

17.0%

 

9.0%

 

16.8%

                       

Adjustments to Net income (loss):

                     
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

GAAP net loss attributable to stockholders

   

$      (93,760)

 

$    (134,479)

 

$      (69,992)

 

$     (228,239)

 

$    (155,401)

Adjustments based on IFRS:

                     

8point3

   

2,458

 

8,101

 

18,039

 

10,559

 

28,758

Utility and power plant projects

   

2,378

 

27,174

 

4,128

 

29,552

 

7,685

Sale of operating lease assets

   

-

 

-

 

2,979

 

-

 

6,099

Sale-leaseback transactions

   

(173)

 

(1,842)

 

2,988

 

(2,015)

 

2,988

Other adjustments:

                     

Stock-based compensation expense

   

8,606

 

7,375

 

16,475

 

15,981

 

32,995

Amortization of intangible assets

   

4,227

 

3,026

 

3,168

 

7,253

 

11,333

Non-cash interest expense

   

35

 

35

 

309

 

70

 

655

Restructuring expense

   

4,969

 

9,790

 

117

 

14,759

 

213

Arbitration ruling

   

-

 

-

 

(5,852)

 

-

 

(5,852)

IPO-related costs

   

(196)

 

114

 

35

 

(82)

 

35

Cost of above-market polysilicon

   

21,826

 

29,815

 

15,901

 

51,641

 

28,615

Other

   

-

 

-

 

(12)

 

-

 

(11)

Tax effect

   

350

 

513

 

(2,454)

 

863

 

(770)

Non-GAAP net loss attributable to stockholders

   

$      (49,280)

 

$      (50,378)

 

$      (14,171)

 

$       (99,658)

 

$      (42,658)

                       
                       

Adjustments to Net income (loss) per diluted share:

                     
   

THREE MONTHS ENDED

 

SIX MONTHS ENDED

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

Net income (loss) per diluted share

                     

Numerator:

                     

GAAP net loss available to common stockholders1

   

$      (93,760)

 

$    (134,479)

 

$      (69,992)

 

$     (228,239)

 

$    (155,401)

Non-GAAP net loss available to common stockholders1

   

$      (49,280)

 

$      (50,378)

 

$      (14,171)

 

$       (99,658)

 

$      (42,658)

                       

Denominator:

                     

GAAP weighted-average shares

   

139,448

 

138,902

 

138,084

 

139,175

 

137,644

Effect of dilutive securities:

                     

Stock options

   

-

 

-

 

-

 

-

 

-

Restricted stock units

   

-

 

-

 

-

 

-

 

-

Upfront warrants (held by Total)

   

-

 

-

 

-

 

-

 

-

Warrants (under the CSO2015)

   

-

 

-

 

-

 

-

 

-

0.75% debentures due 2018

   

-

 

-

 

-

 

-

 

-

Non-GAAP weighted-average shares1

   

139,448

 

138,902

 

138,084

 

139,175

 

137,644

                       

GAAP net loss per diluted share

   

$          (0.67)

 

$           (0.97)

 

$           (0.51)

 

$            (1.64)

 

$           (1.13)

Non-GAAP net loss per diluted share

   

$          (0.35)

 

$           (0.36)

 

$           (0.10)

 

$            (0.72)

 

$           (0.31)

                       

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

 

SIX MONTHS ENDED

     

Jul. 2,

 

Apr. 2,

 

Jul. 3,

 

Jul. 2,

 

Jul. 3,

     

2017

 

2017

 

2016

 

2017

 

2016

GAAP net loss attributable to stockholders

   

$      (93,760)

 

$    (134,479)

 

$      (69,992)

 

$     (228,239)

 

$    (155,401)

Adjustments based on IFRS:

                     

8point3

   

2,458

 

8,101

 

18,039

 

10,559

 

28,758

Utility and power plant projects

   

2,378

 

27,174

 

4,128

 

29,552

 

7,685

Sale of operating lease assets

   

-

 

-

 

2,979

 

-

 

6,099

Sale-leaseback transactions

   

(173)

 

(1,842)

 

2,988

 

(2,015)

 

2,988

Other adjustments:

                     

Stock-based compensation expense

   

8,606

 

7,375

 

16,475

 

15,981

 

32,995

Amortization of intangible assets

   

4,227

 

3,026

 

3,168

 

7,253

 

11,333

Non-cash interest expense

   

35

 

35

 

309

 

70

 

655

Restructuring expense

   

4,969

 

9,790

 

117

 

14,759

 

213

Arbitration ruling

   

-

 

-

 

(5,852)

 

-

 

(5,852)

IPO-related costs

   

(196)

 

114

 

35

 

(82)

 

35

Cost of above-market polysilicon

   

21,826

 

29,815

 

15,901

 

51,641

 

28,615

Other

   

-

 

-

 

(12)

 

-

 

(11)

Cash interest expense, net of interest income

   

19,886

 

18,529

 

13,144

 

38,415

 

25,328

Provision for income taxes

   

2,353

 

2,031

 

6,648

 

4,384

 

9,829

Depreciation

   

40,917

 

38,932

 

37,730

 

79,849

 

71,556

Adjusted EBITDA

   

$        13,526

 

$           8,601

 

$         45,805

 

$          22,127

 

$         64,825

 

Q3 2017 and FY 2017 GUIDANCE

(in thousands except percentages)

Q3 2017

FY 2017

Revenue (GAAP)

$300,000-$350,000

$1,850,000-$2,050,000

Revenue (non-GAAP) (1)

$320,000-$370,000

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

Gross margin (GAAP)

(3)%-(1)%

N/A

Gross margin (non-GAAP) (2)

5%-7%

N/A

Net loss (GAAP)

$(120,000)-$(100,000)

N/A

Adjusted EBITDA (3)

$0-$20,000

N/A

   

(1)

Estimated non-GAAP amounts above for Q3 2017 include net adjustments that increase revenue by approximately $20 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2017 include net adjustments that increase (decrease) revenue by approximately $(60) million related to 8point3, and $310 million related to sale-leaseback transactions.

   

(2)

Estimated non-GAAP amounts above for Q3 2017 include net adjustments that increase gross margin by approximately $6 million related to utility and power plant projects, $3 million related to sale-leaseback transactions, $3 million related to stock-based compensation expense, $1 million related to amortization of intangible assets, and $21 million related to cost of above-market polysilicon.

   

(3)

Estimated Adjusted EBITDA amounts above for Q3 2017 include net adjustments that decrease net loss by approximately $6 million related to utility and power plant projects, $3 million related to sale-leaseback transactions, $10 million related to stock-based compensation expense, $3 million related to amortization of intangible assets, $1 million related to non-cash interest expense, $10 million related to restructuring, $21 million related to interest expense, $2 million related to income taxes, $43 million related to depreciation, and $21 million related to cost of above-market polysilicon.

 

The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross margin, net income (loss) and net income (loss) per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.

 

   

SUPPLEMENTAL DATA

   

(In thousands, except percentages)

                                                                 
   

THREE MONTHS ENDED

                                                                 
   

July 2, 2017

   

 Revenue 

 

 Gross margin 

 

 Operating expenses 

 

 Other income
(expense), net 

 

 Benefit from
(provision for)
income taxes 

 

 Equity in earnings
of unconsolidated
investees 

 

 Net income (loss)
attributable to
stockholders 

   

Residential

 

Commercial

 

Power Plant

 

Residential

 

Commercial

 

Power Plant

 

 Research and
development 

 

 Selling, general
and administrative 

 

 Restructuring charges 

       

GAAP

 

$                    157,125

 

$                   100,105

 

$                    80,216

 

$                    26,138

 

16.6%

 

$                       2,575

 

2.6%

 

$                (13,478)

 

-16.8%

                         

$                   (93,760)

Adjustments based on IFRS:

                                                               

8point3

 

(1,319)

 

1,470

 

(374)

 

(477)

     

891

     

456

     

-

 

-

 

-

 

1,060

 

-

 

528

 

2,458

Utility and power plant projects

 

-

 

327

 

8

 

-

     

327

     

2,051

     

-

 

-

 

-

 

-

 

-

 

-

 

2,378

Sale-leaseback transactions

 

-

 

3,927

 

-

 

-

     

(2,225)

     

(45)

     

-

 

-

 

-

 

2,097

 

-

 

-

 

(173)

Other adjustments:

                                                               

Stock-based compensation expense

 

-

 

-

 

-

 

314

     

293

     

445

     

1,036

 

6,518

 

-

 

-

 

-

 

-

 

8,606

Amortization of intangible assets

 

-

 

-

 

-

 

870

     

672

     

1,025

     

1,201

 

459

 

-

 

-

 

-

 

-

 

4,227

Non-cash interest expense

 

-

 

-

 

-

 

2

     

2

     

6

     

4

 

21

 

-

 

-

 

-

 

-

 

35

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

4,969

 

-

 

-

 

-

 

4,969

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

(196)

 

-

 

-

 

-

 

-

 

(196)

Cost of above-market polysilicon

 

-

 

-

 

-

 

4,731

     

5,000

     

12,095

     

-

 

-

 

-

 

-

 

-

 

-

 

21,826

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

350

 

-

 

350

Non-GAAP

 

$                    155,806

 

$                   105,829

 

$                    79,850

 

$                    31,578

 

20.3%

 

$                       7,535

 

7.1%

 

$                    2,555

 

3.2%

                         

$                   (49,280)

                                                                 
                                                                 
   

April 2, 2017

   

 Revenue 

 

 Gross margin 

 

 Operating expenses 

 

 Other income (expense), net 

 

 Benefit from (provision for) income taxes 

 

 Equity in earnings of unconsolidated investees 

 

 Net income (loss)
attributable to
stockholders 

   

Residential

 

Commercial

 

Power Plant

 

Residential

 

Commercial

 

Power Plant

 

 Research and
development 

 

 Selling, general
and administrative 

 

 Restructuring
charges 

       

GAAP

 

$                    136,031

 

$                   108,263

 

$                 154,782

 

$                    15,274

 

11.2%

 

$                     (2,366)

 

-2.2%

 

$                (43,840)

 

-28.3%

                         

$                   (134,479)

Adjustments based on IFRS:

                                                               

8point3

 

(1,337)

 

2,667

 

(617)

 

(503)

     

1,693

     

(1)

     

-

 

-

 

-

 

6,066

 

-

 

846

 

8,101

Utility and power plant projects

 

-

 

-

 

(23,780)

 

-

     

-

     

27,174

     

-

 

-

 

-

 

-

 

-

 

-

 

27,174

Sale-leaseback transactions

 

-

 

23,041

 

30,437

 

-

     

(2,665)

     

(479)

     

-

 

-

 

-

 

1,302

 

-

 

-

 

(1,842)

Other adjustments:

                                                               

Stock-based compensation expense

 

-

 

-

 

-

 

210

     

249

     

725

     

1,528

 

4,663

 

-

 

-

 

-

 

-

 

7,375

Amortization of intangible assets

 

-

 

-

 

-

 

1,214

     

836

     

517

     

-

 

459

 

-

 

-

 

-

 

-

 

3,026

Non-cash interest expense

 

-

 

-

 

-

 

4

     

3

     

3

     

4

 

21

 

-

 

-

 

-

 

-

 

35

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

9,790

 

-

 

-

 

-

 

9,790

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

114

 

-

 

-

 

-

 

-

 

114

Cost of above-market polysilicon

 

-

 

-

 

-

 

4,351

     

7,132

     

18,332

     

-

 

-

 

-

 

-

 

-

 

-

 

29,815

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

513

 

-

 

513

Non-GAAP

 

$                    134,694

 

$                   133,971

 

$                 160,822

 

$                    20,550

 

15.3%

 

$                       4,882

 

3.6%

 

$                    2,431

 

1.5%

                         

$                   (50,378)

                                                                 
                                                                 
   

July 3, 2016

   

 Revenue 

 

 Gross margin 

 

 Operating expenses 

 

 Other income (expense), net 

 

 Benefit from (provision for) income taxes 

 

 Equity in earnings of unconsolidated investees 

 

 Net income (loss) attributable to stockholders 

   

Residential

 

Commercial

 

Power Plant

 

Residential

 

Commercial

 

Power Plant

 

 Research and
development 

 

 Selling, general
and administrative 

 

 Restructuring
charges 

       

GAAP

 

$                    177,715

 

$                     97,846

 

$                 144,891

 

$                    38,756

 

21.8%

 

$                       8,323

 

8.5%

 

$                  (5,785)

 

-4.0%

                         

$                   (69,992)

Adjustments based on IFRS:

                                                               

8point3

 

(1,287)

 

-

 

(113)

 

(419)

     

179

     

30

     

-

#

-

#

-

#

1,061

#

-

 

17,188

 

18,039

Utility and power plant projects

 

-

 

-

 

(40,085)

 

-

     

-

     

4,128

     

-

#

-

#

-

#

-

#

-

 

-

 

4,128

Sale of operating lease assets

 

10,183

 

-

 

-

 

2,966

     

-

     

-

     

-

#

-

#

-

#

13

#

-

 

-

 

2,979

Sale-leaseback transactions

 

-

 

12,646

 

-

 

-

     

2,988

     

-

     

-

 

-

 

-

 

-

 

-

 

-

 

2,988

Other adjustments:

                                                               

Stock-based compensation expense

 

-

 

-

 

-

 

1,652

     

745

     

3,067

     

2,965

 

8,046

 

-

 

-

 

-

 

-

 

16,475

Amortization of intangible assets

 

-

 

-

 

-

 

576

     

608

     

346

     

1,187

 

451

 

-

 

-

 

-

 

-

 

3,168

Non-cash interest expense

 

-

 

-

 

-

 

63

     

52

     

169

     

3

 

22

 

-

 

-

 

-

 

-

 

309

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

117

 

-

 

-

 

-

 

117

Arbitration ruling

 

-

 

-

 

-

 

(1,345)

     

(922)

     

(3,585)

     

-

 

-

 

-

 

-

 

-

 

-

 

(5,852)

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

35

 

-

 

-

 

-

 

-

 

35

Cost of above-market polysilicon

 

-

 

-

 

-

 

3,619

     

2,531

     

9,751

     

-

 

-

 

-

 

-

 

-

 

-

 

15,901

Other

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

(12)

 

-

 

-

 

(12)

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

(2,454)

 

-

 

(2,454)

Non-GAAP

 

$                    186,611

 

$                   110,492

 

$                 104,693

 

$                    45,868

 

24.6%

 

$                     14,504

 

13.1%

 

$                    8,121

 

7.8%

                         

$                   (14,171)

                                                                 
                                                                 
   

SIX MONTHS ENDED

                                                                 
   

July 2, 2017

   

 Revenue 

 

 Gross margin 

 

 Operating expenses 

 

 Other income (expense), net 

 

 Benefit from (provision for) income taxes 

 

 Equity in earnings of unconsolidated investees 

 

 Net income (loss) attributable to stockholders 

   

Residential

 

Commercial

 

Power Plant

 

Residential

 

Commercial

 

Power Plant

 

 Research and
development 

 

 Selling, general
and administrative 

 

 Restructuring
charges 

       

GAAP

 

$                    293,156

 

$                   208,368

 

$                 234,998

 

$                    41,412

 

14.1%

 

$                           209

 

0.1%

 

$                (57,318)

 

-24.4%

                         

$                   (228,239)

Adjustments based on IFRS:

                                                               

8point3

 

(2,656)

 

4,137

 

(991)

 

(980)

     

2,584

     

455

     

-

 

-

 

-

 

7,126

 

-

 

1,374

 

10,559

Utility and power plant projects

 

-

 

327

 

(23,772)

 

-

     

327

     

29,225

     

-

 

-

 

-

 

-

 

-

 

-

 

29,552

Sale-leaseback transactions

 

-

 

26,968

 

30,437

 

-

     

(4,890)

     

(524)

     

-

 

-

 

-

 

3,399

 

-

 

-

 

(2,015)

Other adjustments:

                                                               

Stock-based compensation expense

 

-

 

-

 

-

 

524

     

542

     

1,170

     

2,564

 

11,181

 

-

 

-

 

-

 

-

 

15,981

Amortization of intangible assets

 

-

 

-

 

-

 

2,084

     

1,508

     

1,542

     

1,201

 

918

 

-

 

-

 

-

 

-

 

7,253

Non-cash interest expense

 

-

 

-

 

-

 

6

     

5

     

9

     

8

 

42

 

-

 

-

 

-

 

-

 

70

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

14,759

 

-

 

-

 

-

 

14,759

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

(82)

 

-

 

-

 

-

 

-

 

(82)

Cost of above-market polysilicon

 

-

 

-

 

-

 

9,082

     

12,132

     

30,427

     

-

 

-

 

-

 

-

 

-

 

-

 

51,641

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

863

 

-

 

863

Non-GAAP

 

$                    290,500

 

$                   239,800

 

$                 240,672

 

$                    52,128

 

17.9%

 

$                     12,417

 

5.2%

 

$                    4,986

 

2.1%

                         

$                   (99,658)

                                                                 
                                                                 
                                                                 
                                                                 
   

July 3, 2016

   

 Revenue 

 

 Gross margin 

 

 Operating expenses 

 

 Other income (expense), net 

 

 Benefit from (provision for) income taxes 

 

 Equity in earnings of unconsolidated investees 

 

 Net income (loss) attributable to stockholders 

   

Residential

 

Commercial

 

Power Plant

 

Residential

 

Commercial

 

Power Plant

 

 Research and
development 

 

 Selling, general
and administrative 

 

 Restructuring charges 

       

GAAP

 

$                    329,522

 

$                   150,087

 

$                 325,718

 

$                    72,403

 

22.0%

 

$                     15,338

 

10.2%

 

$                    5,090

 

1.6%

                         

$                   (155,401)

Adjustments based on IFRS:

                                                               

8point3

 

(2,599)

 

-

 

(13,975)

 

(904)

     

179

     

(4,127)

     

-

 

-

 

-

 

2,123

 

-

 

31,487

 

28,758

Utility and power plant projects

 

-

 

-

 

13,453

 

-

     

-

     

7,685

     

-

 

-

 

-

 

-

 

-

 

-

 

7,685

Sale of operating lease assets

 

20,586

 

-

 

-

 

6,078

     

-

     

-

     

-

 

-

 

-

 

21

 

-

 

-

 

6,099

Sale-leaseback transactions

 

-

 

12,646

 

-

 

-

     

2,988

     

-

     

-

 

-

 

-

 

-

 

-

 

-

 

2,988

Other adjustments:

                                                               

Stock-based compensation expense

 

-

 

-

 

-

 

2,479

     

1,397

     

5,713

     

5,997

 

17,409

 

-

 

-

 

-

 

-

 

32,995

Amortization of intangible assets

 

-

 

-

 

-

 

987

     

1,234

     

323

     

3,007

 

5,782

 

-

 

-

 

-

 

-

 

11,333

Non-cash interest expense

 

-

 

-

 

-

 

134

     

91

     

378

     

10

 

42

 

-

 

-

 

-

 

-

 

655

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

213

 

-

 

-

 

-

 

213

Arbitration ruling

 

-

 

-

 

-

 

(1,345)

     

(922)

     

(3,585)

     

-

 

-

 

-

 

-

 

-

 

-

 

(5,852)

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

35

 

-

 

-

 

-

 

-

 

35

Cost of above-market polysilicon

 

-

 

-

 

-

 

7,054

     

4,070

     

17,491

     

-

 

-

 

-

 

-

 

-

 

-

 

28,615

Other

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

1

 

-

 

(12)

 

-

 

-

 

(11)

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

(770)

 

-

 

(770)

Non-GAAP

 

$                    347,509

 

$                   162,733

 

$                 325,196

 

$                    86,886

 

25.0%

 

$                     24,375

 

15.0%

 

$                  28,968

 

8.9%

                         

$                   (42,658)

 

 

SOURCE SunPower Corp.

For further information: Investors, Bob Okunski, 408-240-5447, Bob.Okunski@sunpower.com or Media, Natalie Wymer, 408-457-2348, Natalie.Wymer@sunpower.com