Press Releases

SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- SunPower Corp. (NASDAQ: SPWR) today announced financial results for its fiscal 2014 first quarter.    

"SunPower once again posted strong quarterly results, reflecting the power of our full value chain integration and diversified market footprint. We benefitted from strong demand in our distributed generation channels as well as solid execution in our global power plant business," said Tom Werner, SunPower president and CEO.  "Construction of our new 350-megawatt (MW) solar cell manufacturing facility (Fab 4) is on track with first silicon expected early next year.  This new capacity will allow us to address the growing demand for our high efficiency solar systems and will incorporate technology that further advances SunPower's performance advantage.  A pre-production solar cell incorporating Fab 4 technology was recently measured at more than 25 percent efficiency by the National Renewable Energy Laboratory.

"Regionally, our North America business continued to perform well.  The 579-MWac Solar Star projects for MidAmerican Solar remain on schedule with more than 170-MW grid connected.  We also started construction of a 20-MWac SunPower® C7 Tracker (C7) power plant, with project completion expected early next year.  We ended the quarter with very strong bookings in our commercial business as corporate and public sector customers continued to demonstrate their preference for SunPower's high efficiency solutions.  We also posted another solid quarter in our residential business, where we offer the industry's best technology at a competitive price along with a flexible array of financing options to meet the needs of all customers.  With the recent closing of innovative lease financing facilities with Google and Hannon Armstrong, we continue to grow our residential offerings while improving cash flow. 

"Our EMEA business also performed well as we exceeded our revenue and margin goals for the quarter.  In Europe, demand remained strong and we benefitted from an improving pricing environment.  We also expanded our footprint in France, where 44-MW of recently-awarded French tender projects specified SunPower's technology.  We continue to meet or exceed our power plant project commitments in EMEA, grid connecting the first phase of a 22-MW project in South Africa approximately five months ahead of schedule.  With a strong backlog and favorable pricing trends, we remain bullish on our opportunities in this region.

"We posted another solid quarter in Asia Pacific as pricing remained strong and demand for our distributed generation and power plant solutions in Japan significantly exceeded our supply.  In China, our C7 manufacturing joint venture achieved a number of key milestones during the quarter, including our first cell package order totaling more than 70-MW.  We will continue to scale-up production of this power plant technology for the China market and expect additional orders this year.

"Solar is now competitive with traditional generation in many markets.  We are well-positioned to lead future industry growth because of our unique strategy, differentiated products, 7.5 gigawatt (GW) global pipeline and a decade of experience in both distributed generation and power plant applications," concluded Werner. 

"We again exceeded our revenue and profit goals for the quarter as we benefitted from strong execution in all of our key markets," said Chuck Boynton, SunPower CFO.  "Additionally, we strengthened our balance sheet as we successfully managed our working capital and cash balances.  We were also pleased with our two new financings during the quarter.  Our $250 million Google tax equity partnership supports the profitable growth of our lease business over the long-term, while the Hannon Armstrong $42 million financing offers us a non-recourse debt structure that minimizes interest rate risk, maximizes the value of our existing lease assets and proves the high quality of our lease portfolio."   

First-quarter fiscal 2014 non-GAAP results include net adjustments that increase net income by $10.3 million, including a ($16.6) million gross margin adjustment related to the timing of revenue recognition from utility and power plant projects, $14.9 million in stock-based compensation expense, $5.2 million in non-cash interest expense, ($0.4) million of other adjustments and $7.3 million in tax effect. 

Second Quarter and Fiscal Year 2014 Financial Outlook

The company's second quarter 2014 consolidated non-GAAP guidance is as follows: revenue of $575 million to $625 million, gross margin of 18 percent to 20 percent, net income per diluted share of $0.15 to $0.35 and MW recognized in the range of 275-MW to 300-MW.  On a GAAP basis, the company expects revenue of $500 million to $550 million, gross margin of 18 percent to 20 percent and net income (loss) per diluted share of ($0.10) to $0.10.

For fiscal year 2014, the company's expectations are as follows:  non-GAAP revenue of $2.5 billion to $2.65 billion, gross margin of 19 percent to 21 percent, net income per diluted share of $1.10 to $1.40, capital expenditures of $150 million to $170 million and GW recognized in the range of 1.2-GW to 1.3-GW.  On a GAAP basis, the company expects revenue of $2.55 billion to $2.70 billion, gross margin of 20 percent to 22 percent and net income per diluted share of $0.75 to $1.05. 

The company will host a conference call for investors this afternoon to discuss its first quarter 2014 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 historical 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 2014 performance on the Events and Presentations section of the SunPower 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

SunPower Corp. (NASDAQ: SPWR) designs, manufactures and delivers the highest efficiency, highest reliability solar panels and systems available today. Residential, business, government and utility customers rely on the company's quarter century of experience and guaranteed performance to provide maximum return on investment throughout the life of the solar system. Headquartered in San Jose, Calif., SunPower has offices in North America, Europe, Australia, Africa and Asia. 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) expanding our manufacturing capacity; (b) anticipated construction timelines and milestones for our major projects; (c) growing demand in residential leasing and financing arrangements relating to our residential lease program; (d) growing demand in EMEA and Asia; (e) our growing international project pipeline; (f) our efforts to reduce panel manufacturing costs; (g) our positioning for long-term profitability; (h) strategically managing cash; (i) guidance for the second fiscal quarter of 2014, including non-GAAP revenue, gross margin, net income per diluted share and MW recognized and GAAP revenue, gross margin and net income (loss) per diluted share; (j) guidance for fiscal year 2014, including non-GAAP revenue, gross margin, net income per diluted share and GW recognized and GAAP revenue, gross margin and net income per diluted share; (k) reducing operating expenses; (l) generating free cash flow; (m) additional leasing capacity; and (n) optimization of our cost and capital structure.  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 industry and downward pressure on average selling prices; (2) our liquidity, substantial indebtedness, and our ability to obtain additional financing for our projects and our customers; (3) risks relating to our residential lease business, including risks of customer default, challenges securing lease financing, and declining conventional electricity prices; (4) our ability to meet our cost reduction targets; (5) regulatory changes and the availability of economic incentives promoting use of solar energy; (6) challenges inherent in constructing and maintaining certain of our large projects, such as the Solar Star projects; (7) the success of our ongoing research and development efforts and commercialization of new products and services; (8) fluctuations in our operating results; (9) manufacturing difficulties that could arise; and (10) challenges managing our joint ventures. 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.

SunPower is a registered trademark of SunPower Corp. All other trademarks are the property of their respective owners.

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. Management adjusts for these items because it does not consider such items when evaluating the core operational activities of the company. The specific non-GAAP measures listed below are revenue, gross margin, net income, net income per diluted share, earnings before interest, taxes, depreciation and amortization (EBITDA), and free cash flow. 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 utility and power plant projects as described below. Non-GAAP gross margin includes adjustments relating to utility and power plan projects, stock-based compensation, non-cash interest expense, and other items as described below. In addition to those same adjustments, non-GAAP net income and non-GAAP net income per diluted share are adjusted for the tax effect of these non-GAAP adjustments as described below. In addition to the same adjustments as non-GAAP gross margin, EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation. Free cash flow includes adjustments relating to investing cash flows and lease financings as described below.

Non-GAAP Adjustments

• Utility and power plant projects. The company includes adjustments related to the revenue recognition of utility and power plant projects based on the separately-identifiable components of transactions in order to reflect the substance of the transactions. This treatment is consistent with accounting rules relating to such projects under International Financial Reporting Standards (IFRS). On a GAAP basis, such projects are accounted for under U.S. GAAP real estate accounting guidance. Management calculates separate revenue and cost of revenue amounts each fiscal period in accordance with the two treatments above and the aggregate difference for the company's affected projects is included in the relevant reconciliation tables below. Over the life of each project, cumulative revenue and gross margin will be equivalent under the two treatments; however, revenue and gross margin will generally be recognized earlier under the company's non-GAAP treatment than under the company's GAAP treatment. Among other factors, this is due to the attribution of non-GAAP revenue and margin to the company's project development efforts at the time of initial project sale as required under IFRS accounting rules, whereas no separate attribution to this element occurs under U.S. GAAP real estate accounting guidance. 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 progress at any given time, the relationship in the aggregate will occasionally appear otherwise. Management believes that this adjustment for utility and power plant projects enables investors to evaluate the company's revenue generation performance relative to the direct costs of revenue of its core businesses.

• Gain on contract termination. During the third quarter of fiscal 2013, the company agreed to terminate a contract with one of its suppliers. As a result, the company recorded a gain associated with the non-cash forfeiture of a previously recorded advance from the supplier. As this gain 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.

• Stock-based compensation. Stock-based compensation relates primarily to the company's equity incentive awards. Stock-based compensation is a non-cash expense that varies from period to period and is dependent on market forces that are difficult to predict. Due to this unpredictability, management excludes this item from its internal operating forecasts and models. 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.

• Non-cash interest expense. The company separately accounted for the fair value liabilities of the embedded cash conversion option and the over-allotment option on its 4.5% senior cash convertible debentures issued in 2010 as an original issue discount and a corresponding derivative conversion liability. As a result, the company incurs interest expense that is substantially higher than interest payable on its 4.5% senior cash convertible debentures. The company excludes non-cash interest expense because the expense does not reflect its financial results in the period incurred. In addition, in connection with the Liquidity Support Agreement with Total executed on February 28, 2012, the company issued warrants to Total to acquire 9,531,677 shares of its common stock. The fair value of the warrants was recorded as debt issuance costs and amortized over the expected life of the agreement. As a result, the Company incurred non-cash interest expense associated with the amortization of the warrants. 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.

• Other. Beginning in the first quarter of fiscal 2013, the company combined amounts previously disclosed under separate captions into "Other" when such amounts no longer have a significant impact on the current fiscal period. 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.

The adjustments recorded in "Other" for the first quarter of fiscal 2014 are primarily driven by adjustments which would have previously been disclosed under "Restructuring charges."

• 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 proportion to earnings for that period. 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.

• EBITDA adjustments. When calculating 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 income taxes
• Depreciation

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

• Free cash flow adjustments. When calculating free cash flow, the company includes the impact during the period of the following items:

• Net cash used in investing activities
• Proceeds from residential lease financing
• Proceeds from issuance of non-recourse debt financing
• Proceeds from sale-leaseback financing
• Contributions from noncontrolling interests
• Distributions to noncontrolling interests
• Repayment of sale-leaseback financing
• Repayment of residential lease financing

Management presents this non-GAAP financial measure to enable investors with a basis 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.

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.

SOURCE SunPower Corp.