SAN JOSE, Calif., Oct 19, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- SunPower Corporation (Nasdaq: SPWR) today announced that revenue for the third quarter ended September 30, 2006 was $65.3 million, up 19% from the prior quarter's revenue of $54.7 million and up 198% from the third quarter 2005 revenue of $21.9 million.
GAAP net income for the quarter was $9.6 million, or $0.13 diluted earnings per share, compared to last quarter's net income of $5.4 million or $0.08 per share and the third quarter 2005 net loss of $1.6 million.
On a non-GAAP basis, excluding amortization of intangible assets, stock- based compensation and the related tax effects, third quarter net income was $12.1 million or $0.16 diluted earnings per share, compared to the prior quarter's non-GAAP net income of $7.5 million and the third quarter 2005 non- GAAP net loss of $0.1 million.
Tom Werner, SunPower's CEO, said, "We posted another strong quarter with operating results that exceeded our announced objectives. We saw excellent execution across the company, with significant progress on a number of fronts. Our plans for rapid growth continue on track: SunPower has tripled solar cell manufacturing capacity over the past year and we plan to more than double that capacity by the end of next year while rapidly expanding our panel manufacturing in parallel. We have entered into a joint venture to construct and operate a new silicon ingot manufacturing facility in Korea. Our R&D group is establishing a formidable intellectual property position. Our marketing team is leveraging SunPower's industry-leading technology to deliver our customers highly differentiated products that combine superior performance with a more attractive appearance.
"We are particularly excited about the announcement of our new SPR-315 solar panel earlier this week," continued Werner. "This groundbreaking product incorporates our new 22% efficient Gen 2 solar cells and is rated at 315 watts -- about twice the power of conventional solar panels. Gen 2 technology is an important element in our roadmap to drive down the installed cost of solar systems to be competitive with retail electric rates in five to ten years."
Highlights for the quarter included:
-- CTO wins Becquerel Prize: SunPower's founder and Chief Technology
Officer, Richard Swanson, received the 2006 Becquerel Prize for his
outstanding contributions to the development of high-efficiency solar
cells. Dr. Swanson is the second American, and the 14th recipient, to
receive this honor bestowed by the Commission of the European
Communities. Dr. Swanson is one of only two solar scientists to win
both the Becquerel Prize and the William R. Cherry Award, which he
received in 2002 from the IEEE for outstanding contributions to the
photovoltaic field.
-- Production of 22% Gen 2 solar cells: The production ramp of Gen 2 solar
cells on Line 4 at Fab 1 is on schedule and on budget. SunPower's 22%
efficient Gen 2 technology has been manufactured in volume on existing
equipment and will begin volume production over the next two quarters.
Our Gen 2 solar cells will be a full 2 percentage points higher in
efficiency than the minimum 20% rating of SunPower's A-300 solar cells.
Gen 2 cells will extend SunPower's efficiency advantage compared to
conventional cell technology with efficiencies in the 14-15% range.
-- Improved silicon utilization: SunPower has completed its transition to
190 micron thick wafers on all manufacturing lines. This achievement
improved silicon utilization in the third quarter to under 7.5
grams/watt. Gen 2 technology, with a rated solar cell efficiency 10%
higher than SunPower's current A-300 cells, is expected to drive
further silicon utilization improvements to approximately 7 grams/Watt
on Line 4.
-- Build-out of Fab 2: Engineering and site preparation at SunPower's
second solar cell manufacturing facility is now complete. Equipment
has been ordered for the first two out of ten planned cell
manufacturing lines in this new facility, with equipment deliveries
expected to begin in early 2007. These new manufacturing lines are
designed to produce 22% efficient Gen 2 solar cells and have a
nameplate capacity of 33 MW each. Three lines are planned to begin
production in 2007 and five additional lines are planned to begin
production for 2008. Adding these eight lines to the four lines at Fab
1 would bring total solar cell production capacity to approximately 372
megawatts.
-- Start-up of in-house panel production: SunPower began solar panel
production at its new highly automated panel assembly factory located
near Fab 1 in the Philippines. The new factory is designed to allow
for future transition to significantly thinner wafers, and is tooled to
manufacture SunPower's recently announced higher efficiency 315 watt
solar panels as well as our current solar panel products.
-- Creation of a JV ingot manufacturing company: SunPower signed an
agreement with Woongjin Coway, a leading Korean manufacturer of
environmental products, to create a joint venture to manufacture
silicon ingots. The joint venture is intended to produce ingots for
SunPower using polysilicon sourced under a previously announced supply
agreement with DC Chemical. The joint venture plans to begin ordering
ingot pulling equipment in the fourth quarter 2006 with a goal of
initial production in the second half of 2007.
-- Increased market share: Over the past four quarters SunPower increased
by a factor of seven its share of the California residential solar
retrofit market as measured by kilowatts installed. During the third
quarter, as reported by the California Energy Commission, SunPower
captured a 14% share of this market. Domestically, SunPower's high
efficiency solar systems are sold through a network of 56 dealers in
thirteen states, and sold internationally through selected systems
integrators.
"Procuring silicon to fuel our rapid growth continues to be a primary focus for SunPower," said Werner. We have had considerable success in obtaining both raw polysilicon and silicon ingots for our current and future needs."
SunPower's silicon position has remained stable over the last quarter.
-- Polysilicon supply: SunPower currently has contracts with the top
three incumbent polysilicon manufacturers. SunPower is also working in
partnership with two new entrants in the polysilicon market, M.Setek
and DC Chemical, who are also building new polysilicon capacity to
support SunPower's growth.
-- Ingot supply: SunPower buys polysilicon and supplies it to its ingot
manufacturers. SunPower recently signed a supply agreement with REC
SiTech, adding to its roster of contracted ingot suppliers. SunPower's
newly announced joint venture with Woongjin Coway will expand its ingot
supply base.
-- Overall Silicon Supply Position: The table below shows how SunPower's
current Silicon supply positions support its announced capacity ramp
plan.
2006 2007 2008
Expected January 1 Nameplate
Capacity (megawatts) 50 108 207
Production Capacity Supported by
Silicon Contracted to date (megawatts) 65 110 250
Annual Cash Required for Silicon prepayments
in Advance of Delivery ($ millions) $47.6* $48.3 $18.3
* Fourth quarter of 2006 only.
"Our strong execution in the third quarter allowed SunPower to grow its revenue by 19% over the previous quarter and improve non-GAAP gross margin from 24% in the second quarter 2006 to 25% in the third quarter 2006," continued Werner. During the next two quarters we plan to further reduce wafer thickness and demonstrate our ability to mass produce 22% efficient Gen 2 solar cells. We expect stable to slightly increasing silicon prices and stable ASPs during this period. We will mitigate these effects through better silicon utilization, improved economies of scale and incremental manufacturing process improvements.
"Our execution track record and increased visibility with respect to silicon supply allow us to provide revenue guidance for the fourth quarter of 2006 of between $70 to $72 million with expected non-GAAP gross margin of 25% to 26% and diluted non-GAAP net income per of share of $0.16 to $0.17," Werner said.(1) "We reiterate our 2007 revenue guidance of greater than $360 million and expect to hit our non-GAAP target model as a percentage of revenue of 30% gross margin, 10% operating expenses and 20% operating income in the second half of 2007."(2)
About SunPower
SunPower Corp. designs and manufactures high efficiency silicon solar cells and solar panels based on an all-back contact cell design. SunPower's solar cells and panels generate up to 50 percent more power per unit area than conventional solar technologies and have a uniquely attractive, all-black appearance. For more information on SunPower or solar technology, please visit the SunPower website at http://www.sunpowercorp.com. SunPower is a majority owned subsidiary of Cypress Semiconductor Corp. (NYSE: CY).
Forward Looking Statements
Statements herein that are not historical facts and that refer to SunPower's plans and expectations for revenue, gross margin and net income for the fourth quarter and the full year of 2006 and the full year of 2007, SunPower's and expectations for gross margin in the second half of 2007; expected expenditures and deliveries under SunPower's supply contracts; the future construction and operation of SunPower's manufacturing facilities, including with respect to new products; the timing of future manufacturing capacity increases; the future operations of the Woongnjin Coway joint venture; future technological advancements and the performance of new products; trends in SunPower's ASPs and in polysilicon prices; SunPower's ability to achieve greater manufacturing efficiency; and the future supply of polysilicon and ingots, are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We use words such as "believes," "plans" and "expects" and similar expressions to identify forward- looking statements. Such statements are based on our current expectations as of the date of the release, which could change or not materialize as expected. Our actual results may differ materially due to a variety of uncertainties and risk factors, including but not limited to business and economic conditions and growth trends in the solar power industry, our ability to obtain adequate supply of polysilicon and silicon ingots to manufacture our products and the price we pay for such material, our ability to ramp new production lines, the potential renegotiation of or non-performance by parties to our supply contracts, our ability to realize expected manufacturing efficiencies, production difficulties that could arise, the success of our ongoing research and development efforts, and other risks described in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update any such forward- looking statements.
To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude items related to amortization of intangible assets, stock-based compensation and the related tax effects. Management does not consider these charges in evaluating the core operational activities of the Company. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate the Company's current performance. Most analysts covering SunPower use the non-GAAP measures as well. Given management's use of these non-GAAP measures, SunPower believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in SunPower's core business across different time periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may be different from non-GAAP measures used by other companies.
Fiscal Periods
The company operates on a fiscal calendar comprised of four thirteen-week quarters that end at midnight Pacific Time on the Sunday nearest the calendar quarter-end. For simplicity, the company labels its fiscal quarters as ending on the calendar quarter date.
SunPower is a registered trademark of SunPower Corp. Cypress is a registered trademark of Cypress Semiconductor Corp. All other trademarks are the property of their respective owners.
(1) The estimated GAAP gross margin in the fourth quarter of 2006 is
approximately 24%. The estimated GAAP diluted net income per share in
the fourth quarter of 2006 is approximately $0.12 to $0.13.
(2) Anticipated GAAP gross margin, operating expenses and operating income
as a percentage of revenue are approximately 29%, 11% and 18%,
respectively.
SUNPOWER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Sep. 30, Dec. 31,
2006 2005
ASSETS
Cash and cash equivalents $253,735 $143,592
Short-term investments 19,897 --
Accounts receivable, net 47,067 25,498
Inventories 26,069 13,147
Prepaid expenses and other assets 36,051 3,236
Property and equipment, net 163,455 110,559
Goodwill and other intangible assets, net 18,096 21,622
Total assets $564,370 $317,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $47,246 $21,604
Customer advances 40,497 37,400
Total liabilities 87,743 59,004
Stockholders' equity 476,627 258,650
Total liabilities and stockholders' equity $564,370 $317,654
SUNPOWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(On a GAAP basis)
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
2006 2006 2005 2006 2005
Revenues $65,348 $54,695 $21,903 $162,001 $49,395
Cost of revenues 50,164 43,248 18,953 129,678 49,631
Gross margin 15,184 11,447 2,950 32,323 (236)
Operating expenses:
Research and development 2,536 2,588 1,481 7,120 4,508
Selling, general and
administrative 6,206 4,985 2,877 15,572 6,880
Total operating
expenses 8,742 7,573 4,358 22,692 11,388
Operating income (loss) 6,442 3,874 (1,408) 9,631 (11,624)
Interest and other income
(expense), net 3,958 1,922 (222) 6,851 (3,579)
Income (loss) before
income tax provision 10,400 5,796 (1,630) 16,482 (15,203)
Income tax provision 832 412 -- 1,275 --
Net income (loss) $9,568 $5,384 $(1,630) $15,207 $(15,203)
Net income per share:
- Basic $0.14 $0.08 $0.24
- Diluted $0.13 $0.08 $0.22
Shares used in
calculation of net
income per share:
- Basic 68,947 64,040 64,704
- Diluted 73,899 69,408 70,080
Reconciliation of net
income (loss) to non-
GAAP net income (loss):
Net income (loss) before
income taxes $9,568 $5,384 $(1,630) $15,207 $(15,203)
Reconciling items:
Stock-based compensation
expenses 1,157 1,137 326 3,706 510
Amortization of
intangible assets 1,176 1,175 1,176 3,526 3,529
Tax effect 195 (162) -- 33 --
Non-GAAP net income
(loss) $12,096 $7,534 $(128) $22,472 $(11,164)
Non-GAAP:
Basic net income per
share $0.18 $0.12 $0.35
Diluted net income
per share $0.16 $0.11 $0.32
Shares used in
calculation of non-
GAAP net income per
share:
Basic 68,947 64,040 64,704
Diluted 73,899 69,408 70,080
SUNPOWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(On a non-GAAP basis)
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
2006 2006 2005 2006 2005
Revenues $65,348 $54,695 $21,903 $162,001 $49,395
Cost of revenues 48,788 41,839 17,614 125,524 45,847
Gross margin 16,560 12,856 4,289 36,477 3,548
Operating expenses:
Research and development 2,200 2,324 1,359 6,101 4,317
Selling, general and
administrative 5,585 4,346 2,836 13,513 6,816
Total operating
expenses 7,785 6,670 4,195 19,614 11,133
Operating income (loss) 8,775 6,186 94 16,863 (7,585)
Interest and other income
(expense), net 3,958 1,922 (222) 6,851 (3,579)
Income (loss) before
income tax provision 12,733 8,108 (128) 23,714 (11,164)
Income tax provision 637 574 -- 1,242 --
Net income (loss) $12,096 $7,534 $(128) $22,472 $(11,164)
Basic net income per
share $0.18 $0.12 $0.35
Diluted net income per
share $0.16 $0.11 $0.32
Shares used in calculation
of non-GAAP net income
per share:
Basic 68,947 64,040 64,704
Diluted 73,899 69,408 70,080
SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(In thousands, except per share data)
NET INCOME PER SHARE: NINE MOS.
THREE MONTHS ENDED ENDED
Sep. 30, Jun. 30, Sep. 30,
2006 2006 2006
Basic:
GAAP net income per share $0.14 $0.08 $0.24
Reconciling items:
Amortization of intangible assets 0.02 0.02 0.06
Stock-based compensation expense 0.02 0.02 0.05
Non-GAAP net income per share $0.18 $0.12 $0.35
Diluted:
GAAP net income per share $0.13 $0.08 $0.22
Reconciling items:
Amortization of intangible assets 0.02 0.02 0.05
Stock-based compensation expense 0.01 0.01 0.05
Non-GAAP net income per share $0.16 $0.11 $0.32
STATEMENT OF OPERATIONS DATA:
THREE MONTHS ENDED NINE MONTHS ENDED
Sep. 30, Jun. 30, Sep. 30, Sep. 30, Sep. 30,
2006 2006 2005 2006 2005
GAAP cost of revenue $50,164 $43,248 $18,953 $129,678 $49,631
Amortization of intangible
assets (1,176) (1,175) (1,176) (3,526) (3,529)
Stock-based compensation (200) (234) (163) (628) (255)
Non-GAAP cost of revenue $48,788 $41,839 $17,614 $125,524 $45,847
GAAP research and
development expense $2,536 $2,588 $1,481 $7,120 $4,508
Stock-based compensation (336) (264) (122) (1,019) (191)
Non-GAAP research and
development expense $2,200 $2,324 $1,359 $6,101 $4,317
GAAP selling, general and
administrative expense $6,206 $4,985 $2,877 $15,572 $6,880
Stock-based compensation (621) (639) (41) (2,059) (64)
Non-GAAP selling, general
and administrative expense $5,585 $4,346 $2,836 $13,513 $6,816
GAAP operating income
(loss) $6,442 $3,874 $(1,408) $9,631 $(11,624)
Amortization of intangible
assets 1,176 1,175 1,176 3,526 3,529
Stock-based compensation 1,157 1,137 326 3,706 510
Non-GAAP operating income
(loss) $8,775 $6,186 $94 $16,863 $(7,585)
GAAP income (loss) before
income tax provision $10,400 $5,796 $(1,630) $16,482 $(15,203)
Amortization of
intangible assets 1,176 1,175 1,176 3,526 3,529
Stock-based compensation 1,157 1,137 326 3,706 510
Non-GAAP income (loss)
before income tax
provision $12,733 $8,108 $(128) $23,714 $(11,164)
GAAP net income (loss) $9,568 $5,384 $(1,630) $15,207 $(15,203)
Amortization of intangible
assets 1,176 1,175 1,176 3,526 3,529
Stock-based compensation 1,157 1,137 326 3,706 510
Tax effect 195 (162) -- 33 --
Non-GAAP net income
(loss) $12,096 $7,534 $(128) $22,472 $(11,164)
SOURCE SunPower Corporation
Julie Blunden, +1-408-240-5577, or Manny Hernandez, +1-408-240-5574, both of SunPower Corporation
http://www.sunpowercorp.com
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