SunPower Reports Third Quarter 2017 Results
Company Exceeds Revenue, Gross Margin, Adjusted EBITDA and Cash Forecasts

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

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

3rd Quarter

2017

2nd Quarter

2017

3rd Quarter

2016

GAAP revenue

$477.2

$337.4

$729.3

GAAP gross margin

3.3%

4.5%

17.7%

GAAP net loss

($54.2)

($93.8)

($40.5)

GAAP net loss per diluted share

($0.39)

($0.67)

($0.29)

Non-GAAP revenue1

$533.6

$341.5

$770.1

Non-GAAP gross margin1,2

12.8%

12.2%

23.6%

Non-GAAP net income (loss)1,2

$29.5

($49.3)

$124.4

Non-GAAP net income (loss) per diluted share1,2

$0.21

($0.35)

$0.88

Adjusted EBITDA1,2

$67.3

$13.5

$175.6

Operating cash flow

($26.6)

($161.8)

($128.3)

 

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.      

SunPower Logo. (PRNewsFoto/SunPower Corp.)

"We were pleased with our overall results as our diversified model and solid execution enabled us to exceed our financial forecasts for the quarter," said Tom Werner, SunPower president and CEO. "Our distributed generation business performed well as customer demand for our complete solution products remained strong. As expected, we are seeing continued momentum in our commercial segment as we are realizing the benefits from our investments over the last year. Our third quarter performance reflected the completion of our Toyota headquarters project while traction for our SunPower Helix product continued with bookings from both new and repeat customers. Demand for our high quality, industry leading solutions in our residential business remains robust and is supported by our ability to offer customers multiple financing alternatives for their systems. In power plant, we benefitted from the completion and sale of our 69-megawatt (MW) Gala project while executing on our commitments for the fourth quarter including our 100-MW El Pelicano project in Chile which we expect to be sold this year, and demand in our SunPower Solutions group remains strong, with bookings now exceeding 500 MW.

"Operationally, we achieved our cost reduction targets for the quarter and our Fabs remain 100 percent utilized. Also, we further invested in our next generation cell and module technology with the goal of volume production of these products in the second half of 2018. We remain committed to improving our competitive position, strengthening our balance sheet and returning to long-term sustained profitability starting in the second half of 2018."

"Strategically, we have made significant progress in our restructuring program which remains on track to be completed in the first half of next year. Our focus continues to be on maximizing cash flow through project sales, reducing operating expenses and the potential monetization of non-core assets. In relation to the 201 trade case proceedings, we remain committed to advocating our belief that SunPower should be differentially treated or excluded from all remedies as we are a U.S. based company with more than 1,000 direct employees and an employment network exceeding 17,500 people through our indirect dealer channel, supply chain partners, as well as site installation workers across 40 states. Additionally, our industry leading, high efficiency technology, the result of approximately $500 million in U.S. research and development spending, is fundamentally different than the industry standard. Also, our premium pricing and proprietary products serve a distinct subset of the market and do not compete directly with offerings from the petitioners so our exclusion will not hurt their ability to grow their business. We will continue to work with the Trump Administration to ensure all parties are aware of our consistent investment in U.S. jobs, product innovation and the U.S. solar industry and are confident that the President will take these facts into account in the final decision," concluded Werner. 

"Our third quarter results reflect our continued ability to execute on our model while benefitting from our corporate restructuring and cash generating initiatives," said Chuck Boynton, SunPower chief financial officer. "Financially, our focus remains on prudently managing our working capital and strengthening our balance sheet.  To that end, we were pleased to secure nearly $200 million in incremental financings to facilitate further growth in our residential and commercial businesses. Given our strong execution and focus on cash flow, we are well positioned to achieve our strategic goals."

Third quarter fiscal 2017 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $83.7 million, including $12.4 million related to sale-leaseback transactions, $33.5 million related to cost of above market polysilicon, $9.4 million related to stock-based compensation expense, $19.4 million related to tax effect, and $9.0 million of other non-GAAP adjustments. 

Financial Outlook

The company's fourth quarter 2017 guidance assumes the expected sale of the company's 100-MW El Pelicano project in Chile this year as well as the impact of the third quarter recognition of certain projects originally anticipated to close in the fourth quarter. 

The company's fourth quarter GAAP guidance is as follows:  revenue of $635 million to $685 million, gross margin of 6.5 percent to 8.5 percent and a net loss of $80 million to $55 million. Fourth 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 $800 million to $850 million, gross margin of 13 percent to 15 percent, Adjusted EBITDA of $75 million to $100 million and megawatts deployed in the range of 420 MW to 450 MW.

For fiscal year 2017, the company expects revenue of $1.85 billion to $1.90 billion on a GAAP basis and $2.10 billion to $2.15 billion on a non-GAAP basis, gigawatts (GW) deployed in the range of 1.37 GW to 1.40 GW, non-GAAP operational expenses of $330 million to $340 million, lower capital expenditures now forecasted to be in the range of $100 million to $120 million and to exit the year with more than $300 million in cash excluding any proceeds from the potential divestiture of non-core assets.

Additionally, the company is now forecasting 2017 Adjusted EBITDA guidance to be in the range of $165 million to $190 million with positive operating cash flow for the full year 2017.   

The company will host a conference call for investors this morning to discuss its third quarter 2017 performance at 5:30 a.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 third 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 and sale timelines; (b) our product plans and production goals; (c) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (d) 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; (d) our expectations regarding the outcome of the Section 201 trade action, the impact of any remedies imposed thereunder, and our advocacy and response plans; (e) plans for growth in our residential and commercial businesses, and our ability to achieve our strategic goals; (f) 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; (g) our plans to invest in technologies and strategic initiatives and allocate resources; (h) our expectations for the solar industry and the markets we serve, including market conditions, recovery, and long-term prospects for improvement;  (i) our fourth quarter fiscal 2017 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed ;and (j) full year fiscal 2017 guidance, including GAAP and non-GAAP revenue,  gigawatts deployed, operational expenditures, capital expenditures, ending cash, and Adjusted EBITDA, and cash flow. 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) changes in public policy, including the imposition of remedies pursuant to the Section 201 trade action currently before the International Trade Commission; (4) regulatory changes and the availability of economic incentives promoting use of solar energy; (5) challenges inherent in constructing certain of our large projects; (6) 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; (7) fluctuations in our operating results; (8) appropriately sizing our manufacturing capacity and containing manufacturing difficulties that could arise; (9) challenges managing our joint ventures and partnerships; (10) 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; (11) fluctuations or declines in the performance of our solar panels and other products and solutions; and (12) our ability to successfully implement 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.  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) 

       
 

Oct. 1,

 

Jan. 1,

 

2017

 

2017

Assets

     

Current assets:

     

Cash and cash equivalents

$         275,004

 

$         425,309

Restricted cash and cash equivalents, current portion

41,738

 

33,657

Accounts receivable, net

186,230

 

219,638

Costs and estimated earnings in excess of billings

19,229

 

32,780

Inventories

408,212

 

401,707

Advances to suppliers, current portion

46,096

 

111,479

Project assets - plants and land, current portion

364,165

 

374,459

Prepaid expenses and other current assets

164,420

 

315,670

Total current assets

1,505,094

 

1,914,699

       

Restricted cash and cash equivalents, net of current portion

61,211

 

55,246

Restricted long-term marketable securities

6,131

 

4,971

Property, plant and equipment, net

1,052,834

 

1,027,066

Solar power systems leased and to be leased, net

707,534

 

621,267

Project assets - plants and land, net of current portion

42,311

 

33,571

Advances to suppliers, net of current portion

185,968

 

173,277

Long-term financing receivables, net

598,832

 

507,333

Goodwill and other intangible assets, net

33,686

 

44,218

Other long-term assets

115,040

 

185,519

Total assets

$     4,308,641

 

$     4,567,167

       

Liabilities and Equity

     

Current liabilities:

     

Accounts payable

$         408,430

 

$         540,295

Accrued liabilities

251,127

 

391,226

Billings in excess of costs and estimated earnings

8,438

 

77,140

Short-term debt

57,453

 

71,376

Convertible debt, current portion

299,495

 

-

Customer advances, current portion

45,273

 

10,138

Total current liabilities

1,070,216

 

1,090,175

       

Long-term debt

601,070

 

451,243

Convertible debt

815,978

 

1,113,478

Customer advances, net of current portion

71,877

 

298

Other long-term liabilities

795,943

 

721,032

Total liabilities

3,355,084

 

3,376,226

       

Redeemable noncontrolling interests in subsidiaries

125,860

 

103,621

       

Equity:

     

Preferred stock

-

 

-

Common stock

140

 

139

Additional paid-in capital

2,434,428

 

2,410,395

Accumulated deficit

(1,546,511)

 

(1,218,681)

Accumulated other comprehensive loss

(4,109)

 

(7,238)

Treasury stock, at cost

(181,174)

 

(176,783)

Total stockholders' equity

702,774

 

1,007,832

Noncontrolling interests in subsidiaries

124,923

 

79,488

Total equity

827,697

 

1,087,320

Total liabilities and equity

$     4,308,641

 

$     4,567,167

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

                   
 

THREE MONTHS ENDED

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

                   

Revenue:

                 

Residential 

$     153,258

 

$    157,125

 

$     170,345

 

$       446,414

 

$      499,867

Commercial

106,005

 

100,105

 

139,954

 

314,373

 

290,041

Power Plant

217,928

 

80,216

 

419,047

 

452,926

 

744,765

Total revenue

477,191

 

337,446

 

729,346

 

1,213,713

 

1,534,673

Cost of revenue:

                 

Residential 

126,614

 

130,987

 

138,836

 

378,358

 

395,955

Commercial

99,988

 

97,530

 

132,618

 

308,147

 

267,367

Power Plant

234,931

 

93,694

 

328,684

 

527,247

 

649,312

Total cost of revenue

461,533

 

322,211

 

600,138

 

1,213,752

 

1,312,634

Gross margin

15,658

 

15,235

 

129,208

 

(39)

 

222,039

Operating expenses:

                 

Research and development

20,693

 

19,754

 

28,153

 

60,962

 

92,270

Selling, general and administrative

68,401

 

68,703

 

80,070

 

204,507

 

262,544

Restructuring charges

3,517

 

4,969

 

31,202

 

18,276

 

31,415

  Total operating expenses

92,611

 

93,426

 

139,425

 

283,745

 

386,229

Operating loss

(76,953)

 

(78,191)

 

(10,217)

 

(283,784)

 

(164,190)

Other income (expense), net:

                 

Interest income

636

 

387

 

630

 

1,961

 

2,133

Interest expense

(21,898)

 

(22,370)

 

(15,813)

 

(65,037)

 

(42,644)

Gain on settlement of preexisting relationships in connection with acquisition

-

 

-

 

203,252

 

-

 

203,252

Loss on equity method investment in connection with acquisition

-

 

-

 

(90,946)

 

-

 

(90,946)

Goodwill impairment

-

 

-

 

(147,365)

 

-

 

(147,365)

Other, net

(1,406)

 

(15,744)

 

(5,169)

 

(19,340)

 

(17,223)

  Other expense, net

(22,668)

 

(37,727)

 

(55,411)

 

(82,416)

 

(92,793)

Loss before income taxes and equity in earnings of unconsolidated investees

(99,621)

 

(115,918)

 

(65,628)

 

(366,200)

 

(256,983)

Benefit from (provision for) income taxes

5,457

 

(2,353)

 

(7,049)

 

1,073

 

(16,878)

Equity in earnings of unconsolidated investees

15,308

 

5,449

 

16,770

 

21,809

 

24,356

Net loss  

(78,856)

 

(112,822)

 

(55,907)

 

(343,318)

 

(249,505)

  Net loss attributable to noncontrolling interests and redeemable noncontrolling interests

24,609

 

19,062

 

15,362

 

60,832

 

53,559

Net loss attributable to stockholders

$     (54,247)

 

$    (93,760)

 

$     (40,545)

 

$     (282,486)

 

$    (195,946)

                   

Net loss per share attributable to stockholders:

                 

- Basic

$          (0.39)

 

$         (0.67)

 

$          (0.29)

 

$            (2.03)

 

$           (1.42)

- Diluted

$          (0.39)

 

$         (0.67)

 

$          (0.29)

 

$            (2.03)

 

$           (1.42)

                   

Weighted-average shares:

                 

- Basic

139,517

 

139,448

 

138,209

 

139,289

 

137,832

- Diluted

139,517

 

139,448

 

138,209

 

139,289

 

137,832

 

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                     
 

THREE MONTHS ENDED

 

NINE MONTHS ENDED

   

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

   

2017

 

2017

 

2016

 

2017

 

2016

                     

Cash flows from operating activities:

                   

Net loss

 

$           (78,856)

 

$         (112,822)

 

$      (55,907)

 

$         (343,318)

 

$         (249,505)

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

                   

Depreciation and amortization

 

46,188

 

45,269

 

39,827

 

133,541

 

122,842

Stock-based compensation

 

9,399

 

8,606

 

15,907

 

25,380

 

48,902

Non-cash interest expense

 

4,818

 

4,777

 

308

 

12,553

 

963

Non-cash restructuring charges

 

-

 

-

 

17,926

 

-

 

17,926

Gain on settlement of preexisting relationships in connection with acquisition

 

-

 

-

 

(203,252)

 

-

 

(203,252)

Impairment of equity method investment

 

-

 

8,607

 

90,946

 

8,607

 

90,946

Goodwill impairment

 

-

 

-

 

147,365

 

-

 

147,365

Dividend from 8point3 Energy Partners LP

 

7,631

 

7,409

 

-

 

22,232

 

-

Equity in earnings of unconsolidated investees

 

(15,308)

 

(5,449)

 

(16,770)

 

(21,809)

 

(24,356)

Excess tax benefit from stock-based compensation

 

-

 

-

 

(1,222)

 

-

 

(1,222)

Deferred income taxes

 

290

 

1,058

 

1,852

 

1,575

 

2,791

Other, net

 

1,020

 

(617)

 

2,006

 

5,180

 

3,805

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

             

-

   

Accounts receivable

 

10,331

 

(27,224)

 

(13,268)

 

34,776

 

(36,563)

Costs and estimated earnings in excess of billings

 

394

 

1,859

 

7,278

 

13,551

 

13,579

Inventories

 

9,432

 

(36,440)

 

13,901

 

(67,012)

 

(101,146)

Project assets

 

(2,194)

 

(97,022)

 

(1,262)

 

(62,024)

 

(434,645)

Prepaid expenses and other assets

 

11,525

 

53,852

 

20,674

 

150,628

 

69,293

Long-term financing receivables, net

 

(28,984)

 

(31,872)

 

(41,424)

 

(91,499)

 

(136,543)

Advances to suppliers

 

19,910

 

19,081

 

4,434

 

52,692

 

45,003

Accounts payable and other accrued liabilities

 

(20,495)

 

(9,754)

 

(156,279)

 

(228,368)

 

(144,202)

Billings in excess of costs and estimated earnings

 

(3,269)

 

(4,411)

 

7,170

 

(68,702)

 

(15,879)

Customer advances

 

1,556

 

13,294

 

(8,556)

 

106,713

 

(14,440)

Net cash used in operating activities

 

(26,612)

 

(161,799)

 

(128,346)

 

(315,304)

 

(798,338)

Cash flows from investing activities:

                   

Purchases of property, plant and equipment

 

(12,491)

 

(17,246)

 

(56,150)

 

(57,614)

 

(149,475)

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

 

(23,504)

 

(22,811)

 

(18,261)

 

(64,532)

 

(64,417)

Cash paid for solar power systems

 

(30,230)

 

(3,407)

 

-

 

(38,242)

 

(2,282)

Proceeds from sales or maturities marketable securities

 

-

 

-

 

6,210

 

-

 

6,210

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

 

-

 

-

 

-

 

-

 

(9,838)

Purchases of marketable securities

 

(1,306)

 

-

 

-

 

(1,306)

 

-

Cash paid for acquisitions, net of cash acquired

 

-

 

-

 

(24,003)

 

-

 

(24,003)

Dividend from equity method investee

 

1,470

 

1,421

 

-

 

2,891

 

-

Cash paid for investments in unconsolidated investees

 

(4,344)

 

(1,461)

 

(737)

 

(15,947)

 

(11,046)

Net cash used in investing activities

 

(70,405)

 

(43,504)

 

(92,941)

 

(174,750)

 

(254,851)

Cash flows from financing activities:

                   

Proceeds from bank loans and other debt

 

81,749

 

90,637

 

-

 

283,149

 

-

Repayment of bank loans and other debt

 

(74,622)

 

(99,913)

 

(7,685)

 

(303,562)

 

(15,572)

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

 

52,535

 

10,062

 

89,634

 

83,177

 

142,862

Repayment of non-recourse residential financing

 

(1,731)

 

(1,726)

 

(34,541)

 

(4,755)

 

(36,707)

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

 

44,412

 

47,595

 

34,558

 

141,037

 

91,723

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

 

(4,574)

 

(4,691)

 

(6,514)

 

(13,028)

 

(13,419)

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

 

92,014

 

104,843

 

168,794

 

318,675

 

602,286

Repayment of non-recourse power plant and commercial financing

 

(116,585)

 

(3,057)

 

(220,186)

 

(148,606)

 

(257,538)

Contributions from noncontrolling interests attributable to power plant and commercial projects

 

800

 

-

 

-

 

800

 

-

Excess tax benefit from stock-based compensation

 

-

 

-

 

1,222

 

-

 

1,222

Purchases of stock for tax withholding obligations on vested restricted stock

 

(175)

 

(153)

 

(1,282)

 

(4,390)

 

(20,953)

Net cash provided by financing activities

 

73,823

 

143,597

 

24,000

 

352,497

 

493,904

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

 

124

 

386

 

1,173

 

1,298

 

1,480

Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents

 

(23,070)

 

(61,320)

 

(196,114)

 

(136,259)

 

(557,805)

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

 

401,023

 

462,343

 

659,073

 

514,212

 

1,020,764

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

 

$      377,953

 

$      401,023

 

$      462,959

 

$       377,953

 

$        462,959

                     

Non-cash transactions:

                   

Assignment of residential lease receivables to third parties

 

$               65

 

$                 7

 

$          1,246

 

$                90

 

$            3,722

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

 

$        14,925

 

$        14,078

 

$        14,092

 

$         42,392

 

$          43,983

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

 

$          5,298

 

$          7,016

 

$          6,226

 

$           5,298

 

$            6,226

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

 

$        10,266

 

$          2,702

 

$                  -

 

$         65,885

 

$            7,375

Property, plant and equipment acquisitions funded by liabilities

 

$        32,367

 

$        40,669

 

$        85,994

 

$         32,367

 

$          85,994

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

 

$             445

 

$          1,858

 

$        34,862

 

$           4,918

 

$          43,588

Exchange of receivables for an investment in an unconsolidated investee

 

$                  -

 

$                  -

 

$                  -

 

$                   -

 

$            2,890

Contractual obligations satisfied with inventory

 

$        13,187

 

$          6,668

 

$                  -

 

$         19,855

 

$                    -

Acquisition funded by liabilities

 

$                  -

 

$                  -

 

$      100,550

 

$                   -

 

$        100,550

 

 

 

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 cost of above-market polysilicon, stock-based compensation, amortization of intangible assets, non-cash interest expense, and arbitration ruling, 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 goodwill impairment, restructuring expense, IPO-related costs, the tax effect of these non-GAAP adjustments, and other items, each 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 primarily 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

  • 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.
     
  • 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.
     
  • Goodwill impairment. In the third quarter of 2016, the company performed an interim goodwill impairment evaluation, due to current market circumstances, including a decline in the company's stock price which resulted in the market capitalization of the company being below its book value. The company's preliminary calculation determined that the implied fair value of goodwill for all reporting units was zero and therefore recorded a goodwill impairment loss of $147.4 million, which includes $89.6 million of goodwill recognized in the third quarter of 2016 in connection with the company's acquisition of the remaining 50% of AUOSP, a joint venture for the purpose of manufacturing solar cells in which the company previously owned 50%. No adjustment to non-GAAP financial measures was made for the portion of the impairment charge derived from AUOSP, resulting in a non-GAAP adjustment of $57.8 million. Management believes that it is appropriate to exclude this impairment charge from the company's non-GAAP financial measures as it arises from prior acquisitions, is not reflective of ongoing operating results, and does not contribute to a meaningful evaluation of a company's past operating performance. The impact of the AUOSP acquisition to the company's GAAP and non-GAAP income statements in the third quarter of 2016 was $22.7 million, including a $203.2 million gain on settling preexisting relationships offset by a $90.9 million loss on the prior equity method investment and $89.6 million of goodwill impairment.
     
  • 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.
     
  • 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

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

GAAP revenue

$     477,191

 

$      337,446

 

$       729,346

 

$      1,213,713

 

$      1,534,673

Adjustments based on IFRS:

                 

8point3

(899)

 

(223)

 

33,301

 

(409)

 

16,727

Utility and power plant projects

5,887

 

335

 

37

 

(17,558)

 

13,490

Sale of operating lease assets

-

 

-

 

7,424

 

-

 

28,010

Sale-leaseback transactions

51,412

 

3,927

 

-

 

108,817

 

12,646

Non-GAAP revenue

$     533,591

 

$      341,485

 

$       770,108

 

$      1,304,563

 

$      1,605,546

                   

Adjustments to Gross Profit/Margin:

                 
 

THREE MONTHS ENDED

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

GAAP gross profit

$        15,658

 

$         15,235

 

$       129,208

 

$                  (39)

 

$         222,039

Adjustments based on IFRS:

                 

8point3

(377)

 

870

 

13,788

 

1,682

 

8,936

Utility and power plant projects

3,367

 

2,378

 

47

 

32,919

 

7,732

Sale of operating lease assets

-

 

-

 

2,085

 

-

 

8,163

Sale-leaseback transactions

10,669

 

(2,270)

 

85

 

5,255

 

3,073

Other adjustments:

                 

Cost of above-market polysilicon

33,461

 

21,826

 

27,415

 

85,102

 

56,030

Stock-based compensation expense

2,875

 

1,052

 

6,029

 

5,111

 

15,618

Amortization of intangible assets

2,567

 

2,567

 

2,567

 

7,701

 

5,111

Non-cash interest expense

10

 

10

 

283

 

30

 

886

Arbitration ruling

-

 

-

 

-

 

-

 

(5,852)

Non-GAAP gross profit

$        68,230

 

$         41,668

 

$       181,507

 

$         137,761

 

$         321,736

                   

GAAP gross margin (%)

3.3%

 

4.5%

 

17.7%

 

0.0%

 

14.5%

Non-GAAP gross margin (%)

12.8%

 

12.2%

 

23.6%

 

10.6%

 

20.0%

                   

Adjustments to Net income (loss):

                 
 

THREE MONTHS ENDED

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

GAAP net loss attributable to stockholders

$     (54,247)

 

$      (93,760)

 

$       (40,545)

 

$       (282,486)

 

$       (195,946)

Adjustments based on IFRS:

                 

8point3

(916)

 

2,458

 

19,320

 

9,643

 

48,078

Utility and power plant projects

3,367

 

2,378

 

47

 

32,919

 

7,732

Sale of operating lease assets

-

 

-

 

2,098

 

-

 

8,197

Sale-leaseback transactions

12,440

 

(173)

 

277

 

10,425

 

3,265

Other adjustments:

                 

Cost of above-market polysilicon

33,461

 

21,826

 

27,415

 

85,102

 

56,030

Stock-based compensation expense

9,399

 

8,606

 

15,907

 

25,380

 

48,902

Amortization of intangible assets

3,026

 

4,227

 

3,018

 

10,279

 

14,351

Non-cash interest expense

33

 

35

 

308

 

103

 

963

Goodwill impairment

-

 

-

 

57,765

 

-

 

57,765

Restructuring expense

3,517

 

4,969

 

31,202

 

18,276

 

31,415

Arbitration ruling

-

 

-

 

-

 

-

 

(5,852)

IPO-related costs

-

 

(196)

 

-

 

(82)

 

35

Other

-

 

-

 

(20)

 

-

 

(31)

Tax effect

19,407

 

350

 

7,655

 

20,270

 

6,885

Non-GAAP net income (loss) attributable to stockholders

$        29,487

 

$      (49,280)

 

$       124,447

 

$         (70,171)

 

$            81,789

                   
                   

Adjustments to Net income (loss) per diluted share:

                 
 

THREE MONTHS ENDED

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

Net income (loss) per diluted share

                 

Numerator:

                 

GAAP net loss available to common stockholders1

$     (54,247)

 

$      (93,760)

 

$       (40,545)

 

$       (282,486)

 

$       (195,946)

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

$        29,487

 

$      (49,280)

 

$       124,447

 

$         (70,171)

 

$            81,789

                   

Denominator:

                 

GAAP weighted-average shares

139,517

 

139,448

 

138,209

 

139,289

 

137,832

Effect of dilutive securities:

                 

Restricted stock units

1,863

 

-

 

384

 

-

 

684

Upfront warrants (held by Total)

1,406

 

-

 

3,179

 

-

 

4,962

0.75% debentures due 2018

-

 

-

 

-

 

-

 

-

Non-GAAP weighted-average shares1

142,786

 

139,448

 

141,772

 

139,289

 

143,478

                   

GAAP net loss per diluted share

$          (0.39)

 

$           (0.67)

 

$            (0.29)

 

$              (2.03)

 

$              (1.42)

Non-GAAP net income (loss) per diluted share

$            0.21

 

$           (0.35)

 

$              0.88

 

$              (0.50)

 

$                0.57

 

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

 

NINE MONTHS ENDED

 

Oct. 1,

 

Jul. 2,

 

Oct. 2,

 

Oct. 1,

 

Oct. 2,

 

2017

 

2017

 

2016

 

2017

 

2016

GAAP net loss attributable to stockholders

$     (54,247)

 

$      (93,760)

 

$       (40,545)

 

$       (282,486)

 

$       (195,946)

Adjustments based on IFRS:

                 

8point3

(916)

 

2,458

 

19,320

 

9,643

 

48,078

Utility and power plant projects

3,367

 

2,378

 

47

 

32,919

 

7,732

Sale of operating lease assets

-

 

-

 

2,098

 

-

 

8,197

Sale-leaseback transactions

12,440

 

(173)

 

277

 

10,425

 

3,265

Other adjustments:

                 

Cost of above-market polysilicon

33,461

 

21,826

 

27,415

 

85,102

 

56,030

Stock-based compensation expense

9,399

 

8,606

 

15,907

 

25,380

 

48,902

Amortization of intangible assets

3,026

 

4,227

 

3,018

 

10,279

 

14,351

Non-cash interest expense

33

 

35

 

308

 

103

 

963

Goodwill impairment

-

 

-

 

57,765

 

-

 

57,765

Restructuring expense

3,517

 

4,969

 

31,202

 

18,276

 

31,415

Arbitration ruling

-

 

-

 

-

 

-

 

(5,852)

IPO-related costs

-

 

(196)

 

-

 

(82)

 

35

Other

-

 

-

 

(20)

 

-

 

(31)

Cash interest expense, net of interest income

19,492

 

19,886

 

14,990

 

57,907

 

40,318

Provision for (benefit from) income taxes

(5,457)

 

2,353

 

7,049

 

(1,073)

 

16,878

Depreciation

43,161

 

40,917

 

36,809

 

123,010

 

108,365

Adjusted EBITDA

$        67,276

 

$         13,526

 

$       175,640

 

$            89,403

 

$         240,465

 

Q4 2017 and FY 2017 GUIDANCE

(in thousands except percentages)

Q4 2017

FY 2017

Revenue (GAAP)

$635,000-$685,000

$1,850,000-$1,900,000

Revenue (non-GAAP) (1)

$800,000-$850,000

$2,100,000-$2,150,000

Gross margin (GAAP)

6.5%-8.5%

N/A

Gross margin (non-GAAP) (2)

13%-15%

N/A

Net loss (GAAP)

$55,000-$80,000

$337,000-$362,000

Adjusted EBITDA (3)

$75,000-$100,000

$165,000-$190,000

   

(1)

Estimated non-GAAP amounts above for Q4 2017 include net adjustments that increase revenue by approximately $165 million related to sale-leaseback transactions. Estimated non-GAAP amounts above for fiscal 2017 include net adjustments that increase (decrease) revenue by approximately $(20) million related to utility and power plant projects, and $270 million related to sale-leaseback transactions.

   

(2)

Estimated non-GAAP amounts above for Q4 2017 include net adjustments that increase gross margin by approximately $7 million related to utility and power plant projects, $21 million related to sale-leaseback transactions, $36 million related to cost of above-market polysilicon, $3 million related to stock-based compensation expense, and $1 million related to amortization of intangible assets.

   

(3)

Estimated Adjusted EBITDA amounts above for Q4 2017 include net adjustments that decrease net loss by approximately $7 million related to utility and power plant projects, $21 million related to sale-leaseback transactions, $36 million related to cost of above-market polysilicon, $11 million related to stock-based compensation expense, $3 million related to amortization of intangible assets, $3 million related to restructuring, $24 million related to interest expense, $9 million related to income taxes, and $41 million related to depreciation. Estimated Adjusted EBITDA amounts above for fiscal 2017 include net adjustments that decrease net loss by approximately $41 million related to utility and power plant projects, $33 million related to sale-leaseback transactions, $121 million related to cost of above-market polysilicon, $36 million related to stock-based compensation expense, $13 million related to amortization of intangible assets, $24 million related to restructuring, $90 million related to interest expense, $7 million related to income taxes, and $162 million related to depreciation.

 

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

                                                                 
   

October 1, 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

 

$                    153,258

 

$                   106,005

 

$                 217,928

 

$                    26,644

 

17.4%

 

$                       6,017

 

5.7%

 

$                (17,003)

 

-7.8%

                         

$         (54,247)

Adjustments based on IFRS:

                                                               

8point3

 

(1,345)

 

334

 

112

 

(480)

     

212

     

(109)

     

-

 

-

 

-

 

1,070

 

-

 

(1,609)

 

(916)

Utility and power plant projects

 

-

 

-

 

5,887

 

-

     

-

     

3,367

     

-

 

-

 

-

 

-

 

-

 

-

 

3,367

Sale-leaseback transactions

 

-

 

51,412

 

-

 

-

     

10,701

     

(32)

     

-

 

-

 

-

 

1,771

 

-

 

-

 

12,440

Other adjustments:

                                                               

Cost of above-market polysilicon

 

-

 

-

 

-

 

4,751

     

6,996

     

21,714

     

-

 

-

 

-

 

-

 

-

 

-

 

33,461

Stock-based compensation expense

 

-

 

-

 

-

 

869

     

750

     

1,256

     

1,661

 

4,863

 

-

 

-

 

-

 

-

 

9,399

Amortization of intangible assets

 

-

 

-

 

-

 

847

     

821

     

899

     

-

 

459

 

-

 

-

 

-

 

-

 

3,026

Non-cash interest expense

 

-

 

-

 

-

 

2

     

3

     

5

     

4

 

19

 

-

 

-

 

-

 

-

 

33

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

3,517

 

-

 

-

 

-

 

3,517

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

19,407

 

-

 

19,407

Non-GAAP

 

$                    151,913

 

$                   157,751

 

$                 223,927

 

$                    32,633

 

21.5%

 

$                     25,500

 

16.2%

 

$                  10,097

 

4.5%

                         

$           29,487

                                                                 
                                                                 
   

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:

                                                               

Cost of above-market polysilicon

 

-

 

-

 

-

 

4,731

     

5,000

     

12,095

     

-

 

-

 

-

 

-

 

-

 

-

 

21,826

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)

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)

                                                                 
                                                                 
   

October 2, 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

 

$                    170,345

 

$                   139,954

 

$                 419,047

 

$                    31,509

 

18.5%

 

$                       7,336

 

5.2%

 

$                  90,363

 

21.6%

                         

$          (40,545)

Adjustments based on IFRS:

                                                               

8point3

 

(1,336)

 

3,181

 

31,456

 

(250)

     

2,162

     

11,876

     

-

 

-

 

-

 

1,062

 

-

 

4,470

 

19,320

Utility and power plant projects

 

-

 

-

 

37

 

-

     

-

     

47

     

-

 

-

 

-

 

-

 

-

 

-

 

47

Sale of operating lease assets

 

7,424

 

-

 

-

 

2,085

     

-

     

-

     

-

 

-

 

-

 

13

 

-

 

-

 

2,098

Sale-leaseback transactions

 

-

 

-

 

-

 

-

     

85

     

-

     

-

 

-

 

-

 

192

 

-

 

-

 

277

Other adjustments:

                                                               

Cost of above-market polysilicon

 

-

 

-

 

-

 

5,880

     

5,492

     

16,043

     

-

 

-

 

-

 

-

 

-

 

-

 

27,415

Stock-based compensation expense

 

-

 

-

 

-

 

2,083

     

1,744

     

2,202

     

2,935

 

6,943

 

-

 

-

 

-

 

-

 

15,907

Amortization of intangible assets

 

-

 

-

 

-

 

869

     

868

     

830

     

-

 

451

 

-

 

-

 

-

 

-

 

3,018

Non-cash interest expense

 

-

 

-

 

-

 

67

     

84

     

132

     

4

 

21

 

-

 

-

 

-

 

-

 

308

Goodwill impairment

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

57,765

 

-

 

-

 

57,765

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

31,202

 

-

 

-

 

-

 

31,202

Other

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

(33)

 

-

 

13

 

-

 

-

 

(20)

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

7,655

 

-

 

7,655

Non-GAAP

 

$                    176,433

 

$                   143,135

 

$                 450,540

 

$                    42,243

 

23.9%

 

$                     17,771

 

12.4%

 

$                121,493

 

27.0%

                         

$         124,447

                                                                 
                                                                 
   

NINE MONTHS ENDED

                                                                 
   

October 1, 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

 

$                    446,414

 

$                   314,373

 

$                 452,926

 

$                    68,056

 

15.2%

 

$                       6,226

 

2.0%

 

$                (74,321)

 

-16.4%

                         

$        (282,486)

Adjustments based on IFRS:

                                                               

8point3

 

(4,001)

 

4,471

 

(879)

 

(1,460)

     

2,796

     

346

     

-

 

-

 

-

 

8,196

 

-

 

(235)

 

9,643

Utility and power plant projects

 

-

 

327

 

(17,885)

 

-

     

327

     

32,592

     

-

 

-

 

-

 

-

 

-

 

-

 

32,919

Sale-leaseback transactions

 

-

 

78,380

 

30,437

 

-

     

5,811

     

(556)

     

-

 

-

 

-

 

5,170

 

-

 

-

 

10,425

Other adjustments:

                                                               

Cost of above-market polysilicon

 

-

 

-

 

-

 

13,833

     

19,128

     

52,141

     

-

 

-

 

-

 

-

 

-

 

-

 

85,102

Stock-based compensation expense

 

-

 

-

 

-

 

1,393

     

1,292

     

2,426

     

4,225

 

16,044

 

-

 

-

 

-

 

-

 

25,380

Amortization of intangible assets

 

-

 

-

 

-

 

2,931

     

2,329

     

2,441

     

1,201

 

1,377

 

-

 

-

 

-

 

-

 

10,279

Non-cash interest expense

 

-

 

-

 

-

 

8

     

8

     

14

     

12

 

61

 

-

 

-

 

-

 

-

 

103

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

18,276

 

-

 

-

 

-

 

18,276

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

(82)

 

-

 

-

 

-

 

-

 

(82)

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

20,270

 

-

 

20,270

Non-GAAP

 

$                    442,413

 

$                   397,551

 

$                 464,599

 

$                    84,761

 

19.2%

 

$                     37,917

 

9.5%

 

$                  15,083

 

3.2%

                         

$         (70,171)

                                                                 
                                                                 
   

October 2, 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

 

$                    499,867

 

$                   290,041

 

$                 744,765

 

$                  103,912

 

20.8%

 

$                     22,674

 

7.8%

 

$                  95,453

 

12.8%

                         

$          (195,946)

Adjustments based on IFRS:

                                                               

8point3

 

(3,935)

 

3,181

 

17,481

 

(1,154)

     

2,341

     

7,749

     

-

 

-

 

-

 

3,185

 

-

 

35,957

 

48,078

Utility and power plant projects

 

-

 

-

 

13,490

 

-

     

-

     

7,732

     

-

 

-

 

-

 

-

 

-

 

-

 

7,732

Sale of operating lease assets

 

28,010

 

-

 

-

 

8,163

     

-

     

-

     

-

 

-

 

-

 

34

 

-

 

-

 

8,197

Sale-leaseback transactions

 

-

 

12,646

 

-

 

-

     

3,073

     

-

     

-

 

-

 

-

 

192

 

-

 

-

 

3,265

Other adjustments:

                                                               

Cost of above-market polysilicon

 

-

 

-

 

-

 

12,934

     

9,562

     

33,534

     

-

 

-

 

-

 

-

 

-

 

-

 

56,030

Stock-based compensation expense

 

-

 

-

 

-

 

4,562

     

3,141

     

7,915

     

8,932

 

24,352

 

-

 

-

 

-

 

-

 

48,902

Amortization of intangible assets

 

-

 

-

 

-

 

1,856

     

2,102

     

1,153

     

3,007

 

6,233

 

-

 

-

 

-

 

-

 

14,351

Non-cash interest expense

 

-

 

-

 

-

 

201

     

175

     

510

     

14

 

63

 

-

 

-

 

-

 

-

 

963

Goodwill impairment

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

57,765

 

-

 

-

 

57,765

Restructuring expense

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

31,415

 

-

 

-

 

-

 

31,415

Arbitration ruling

 

-

 

-

 

-

 

(1,345)

     

(922)

     

(3,585)

     

-

 

-

 

-

 

-

 

-

 

-

 

(5,852)

IPO-related costs

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

35

 

-

 

-

 

-

 

-

 

35

Other

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

(32)

 

-

 

1

 

-

 

-

 

(31)

Tax effect

 

-

 

-

 

-

 

-

     

-

     

-

     

-

 

-

 

-

 

-

 

6,885

 

-

 

6,885

Non-GAAP

 

$                    523,942

 

$                   305,868

 

$                 775,736

 

$                  129,129

 

24.6%

 

$                     42,146

 

13.8%

 

$                150,461

 

19.4%

                         

$            81,789

 

 

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