SunPower Reports First Quarter 2022 Results

56 mins read
  • Recorded $350 million GAAP revenue, including record-high $336 million non-GAAP residential revenue, 41% year-over-year residential growth
  • Added 16,500 customers, 40% year-over-year growth
  • Entered second quarter with a record 13,800 backlog, up 169% year-over-year
  • Advancing industry leadership with late-stage discussions to develop world’s most innovative residential panel with First Solar

SAN JOSE, Calif., May 5, 2022 — SunPower Corp. (NASDAQ:SPWR), a leading solar technology and energy services provider, today announced financial results for the first quarter, ending April 3, 2022.

“SunPower delivered strong first quarter results, driven by a record $336 million non-GAAP residential revenue, representing 41% growth year-over-year. Demand is accelerating as consumers look to solar as a more stable, secure and sustainable energy source, and this is evident as we enter the second quarter with a record backlog and pipeline for new homes,” said Peter Faricy, SunPower CEO. “We are executing across our key growth pillars and making strategic investments to ensure SunPower can capture this demand. This includes securing nationwide coverage through our direct business and dealer network, creating a world-class customer experience, building out our installation capacity, and developing industry leading financial products, hardware and software solutions.”

SunPower reported first quarter net loss of $2M and Adjusted EBITDA of $11 million.

Capturing Demand by Executing Across Strategic Pillars

Energy share-of-wallet is increasing faster than other spending categories, according to a 2021 Deloitte Insights Consumer Spending Forecast, which predicts customers will increase spending on energy products and services by more than 20% from 2021 to 2026 compared to a total 7% increase in projected disposable personal income during that time. Demand for cleaner, more reliable energy is higher than ever, yet less than 5% of the 100 million home addressable market have adopted solar, presenting a land-grab opportunity for solar providers.

SunPower made significant strides towards capturing this demand in the first quarter, adding 16,500 customers in the period, up 40% from the previous year, with a record customer backlog of 13,800 bookings and a 70,000-customer new homes pipeline, setting the company up for high growth in 2022. SunPower is executing across the strategic pillars described at its recent Analyst Day to ensure it can capture this unprecedented demand through the rest of 2022 and beyond. First quarter updates include:

  1. SunPower is in late-stage discussions with First Solar (NASDAQ: FSLR) to co-develop the world’s most advanced residential solar panel, exclusively for SunPower. This initiative is expected to support SunPower’s strategy to expand its catalog of suppliers while remaining the leader in superior products and tech innovation.
  2. SunPower launched its Dealer Accelerator Program, through which it is making investments in local solar dealers to advance their growth and expand into new territory. As part of the program, participating dealers agree to sell SunPower® solar systems, SunVault™ battery storage and SunPower Financial™ solutions, with the goal of accelerating adoption of solar through SunPower’s ecosystem of products. To date, the company has made minority investments in Freedom Solar, which serves Texas, the Front Range of Colorado and central Florida; and Sea Bright Solar, which serves New Jersey, New York and Southern California. SunPower also added 83 new dealers to its network in the last quarter.
  3. New Homes continues to be a key pillar of SunPower’s business, providing meaningful growth in the first quarter and a record-high pipeline of more than 70,000 single and multifamily homes. SunPower currently holds a 41% market share among the top 60 builders in California and has five national agreements with the top 20 U.S. homebuilders. SunPower is actively expanding its new homes leadership across the country; in March, the company announced a multi-year exclusive agreement with builder Landsea Homes (NASDAQ: LSEA) covering California, Texas, Arizona and Florida.
  4. SunPower Financial closed the Dorado 1 lease/PPA fund, adding approximately $350 million of capacity to support customer demand and growth, reducing the combined cost of capital for lease and loan to less than 5.25%.
  5. SunPower’s Net Promoter Score improved from 35 to 49, a 32% improvement year-over-year. Phone and Chat Service Levels also improved, reducing customer wait times 48% to less than one minute. The company’s digital efforts also resulted in improved App Store ratings for the mySunPower mobile app and web page, with the App Store rating up from 4.2 to 4.4.

Financial Highlights

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

1st Quarter 2022


4th Quarter 2021

1st Quarter 2021

GAAP revenue from continuing operations

$350.3

$347.8

$240.1

GAAP gross margin from continuing operations

20.6%

17.3%


19.1%

GAAP net income (loss) from continuing operations

$(2.2)

$38.9

$(47.1)

GAAP net income (loss) from continuing operations
per diluted share

$(0.01)

$0.22

$(0.28)


Non-GAAP revenue from continuing operations1

$336.1

$347.5

$237.9

Non-GAAP gross margin from continuing operations1

21.7%

17.9%

22.2%

Non-GAAP net income (loss) from continuing operations1


$2.9

$4.1

$10.2

Non-GAAP net income (loss) from continuing
operations per diluted share1

$0.02

$0.02

$0.05

Adjusted EBITDA1

$11.2


$7.7

$18.8

Residential customers

443,800

427,300

363,000

Cash2

$142.3

$123.7


$209.8


The pending sale of our C&I Solutions business met the criteria for classification as “discontinued operations” in accordance with the
guidance in ASC 205-20, Discontinued Operations for the first quarter of fiscal 2022. For all periods presented, the financial results of C&I
Solutions are excluded in the table above.


1Information 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


2Includes cash and cash equivalents, excluding restricted cash


“Closing out a strong first quarter we continue to perform well, with GAAP gross margin of 20.6% and non-GAAP residential gross margins above 20% for six quarters in a row. Additionally, our direct business is growing rapidly and outperforming the market,” said Manavendra Sial, chief financial officer at SunPower. “In the first half of the year, you’ll see us investing heavily in our platform to sustain strong customer demand and ensure our ability to capture the nation’s growing interest in home solar. We expect to reap the rewards of that investment as we look towards the second half of the year and beyond, and we are on track to meet our 2022 guidance.”

Financial highlights include:

  1. Added 16,500 customers in this quarter, bringing total install base to 443,800
  2. Recorded GAAP gross margin of 20.6% and non-GAAP residential gross margin of 23.0%
  3. Achieved SunPower Financial attachment rate greater than 40%

Financial Outlook
SunPower affirmed prior 2022 guidance of $2,000$2,400 Adjusted EBITDA per customer and 73,000-80,000 incremental customers, resulting in $90$110 million Adjusted EBITDA for the year.

Earnings Conference Call Information
SunPower will discuss its first quarter 2022 financial results on a conference call, today, Thursday, May 5 at 1:30 p.m. Pacific Time. The call-in number is (877) 371-5747 conference ID 5479606, passcode: SunPower, or the webcast 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.  


About SunPower
Headquartered in California’s Silicon Valley, SunPower (NASDAQ: SPWR) is a leading Distributed Generation Storage and Energy Services provider in North America. SunPower offers the only solar + storage solution designed and warranted by one company that gives customers control over electricity consumption and resiliency during power outages. 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) expectations regarding demand and our future performance based on backlog, bookings, projected consumer demand, and pipelines in our sales channels and for our products, and our ability to meet consumer demand; (b) our plans and expectations our strategic partnerships and initiatives, including our proposed partnership with First Solar, our agreement with Landsea Homes, and our dealer accelerator program, and the anticipated business and financial impacts thereof; (c) our strategic plans and areas of investment and focus, both current and future, and expectations for the results thereof, including expansion of our direct business and dealer network, improving customer experience, increasing installation capacity, and development of new products and services; (d) our expectations regarding projected demand and growth in 2022 and beyond, our positioning for future success, and ability to capture demand and deliver long-term value to our shareholders; (e) our expectations for industry trends and factors, and the impact thereof on our business and strategic plans; and (f) our guidance for fiscal year 2022, including Adjusted EBITDA per customer, incremental customers, and Adjusted EBITDA, and related assumptions.

These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) regulatory changes and the availability of economic incentives promoting use of solar energy;  (2) potential disruptions to our operations and supply chain that may result from epidemics or natural disasters, including impacts of the Covid-19 pandemic, and other factors; (3) competition in the solar and general energy industry, supply chain constraints, and pricing pressures; (4) changes in public policy, including the imposition and applicability of tariffs; (5) our dependence on sole- or limited-source supply relationships, including for our solar panels and other components of our products; (6) risks related to the introduction of new or enhanced products, including potential technical challenges, lead times, and our ability to match supply with demand while maintaining quality, sales, and support standards; (7) 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; (8) our liquidity, indebtedness, and ability to obtain additional financing for our projects and customers; and (9) challenges managing our acquisitions, joint ventures, and partnerships, including our ability to successfully manage acquired assets and supplier relationships. 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 report on Form 10-K, 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.

©2022 SunPower Corporation. All rights reserved. SUNPOWER, SUNPOWER FINANCIAL, SUNVAULT, and the SUNPOWER logo are trademarks or registered trademarks of SunPower Corporation in the U.S.

SUNPOWER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



April 3, 2022



January 3, 2021

Assets




Current assets:




     Cash and cash equivalents

$                  142,250


$                  123,735

     Restricted cash and cash equivalents, current portion

681


691


     Short-term investments

308,835


365,880

     Accounts receivable, net

116,354


121,268

     Contract assets

35,721


25,994


     Inventories

245,612


214,432

     Advances to suppliers, current portion

2,685


462

     Prepaid expenses and other current assets

128,271


100,212


     Current assets of discontinued operations

179,484


120,792

Total current assets

1,159,893


1,073,466





Restricted cash and cash equivalents, net of current portion

12,857


14,887


Property, plant and equipment, net

42,495


33,560

Operating lease right-of-use assets

30,337


31,654

Solar power systems leased, net

44,550


45,502


Goodwill

126,338


126,338

Other intangible assets, net

24,776


24,879

Other long-term assets

129,529


156,994


Long-term assets of discontinued operations


47,526

Total assets

$               1,570,775


$               1,554,806





Liabilities and Equity




Current liabilities:




     Accounts payable


$                  179,069


$                  138,514

     Accrued liabilities

129,569


101,980

     Operating lease liabilities, current portion

11,439


10,753

     Contract liabilities, current portion


66,127


62,285

     Short-term debt

107,863


109,568

     Convertible debt, current portion

423,987


     Current liabilities of discontinued operations


138,153


86,496

Total current liabilities

1,056,207


509,596





Long-term debt

338


380

Convertible debt, net of current portion



423,677

Operating lease liabilities, net of current portion

26,215


28,566

Contract liabilities, net of current portion

19,059


18,705

Other long-term liabilities


109,295


141,197

Long-term liabilities of discontinued operations


42,661

Total liabilities

1,211,114


1,164,782





Equity:





     Common stock

174


173

     Additional paid-in capital

2,719,927


2,714,500

     Accumulated deficit

(2,150,083)


(2,122,212)


     Accumulated other comprehensive income

11,170


11,168

     Treasury stock, at cost

(222,573)


(215,240)

          Total stockholders’ equity

358,615


388,389


     Noncontrolling interests in subsidiaries

1,046


1,635

          Total equity

359,661


390,024

Total liabilities and equity

$               1,570,775


$               1,554,806


SUNPOWER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)




THREE MONTHS ENDED



April 3, 2022


January 2, 2022


April 4, 2021

Total revenues



$               350,277


$               347,830


$               240,136

Total cost of revenues


277,968


287,585


194,170

Gross profit


72,309



60,245


45,966

Operating expenses:







     Research and development


5,010


4,214


4,624

     Sales, general, and administrative


76,996



68,717


42,267

     Restructuring charges (credits)


627


175


3,766

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





(226)

     (Income) expense from transition services agreement, net


266


956


(3,087)

          Total operating expenses


82,899


74,062


47,344


Operating income (loss)


(10,590)


(13,817)


(1,378)

Other (expense) income, net:







     Interest income


42



52


     Interest expense


(5,044)


(5,203)


(7,027)

     Other, net


1,444


68,871


(44,515)

          Other (expense) income, net



(3,558)


63,668


(51,490)

(Loss) income from continuing operations before income
taxes and equity in earnings of unconsolidated investees


(14,148)


49,851


(52,868)

     Benefits from (provision for) income taxes


11,643



(10,814)


5,126

Net (loss) income from continuing operations


(2,505)


39,037


(47,742)

     (Loss) income from discontinued operations before income
     taxes and equity in losses of unconsolidated investees1


(26,298)


(18,645)



(1,854)

     Benefits from (provision for) income taxes from
     discontinued operations


343


602


98

Net (loss) income from discontinued operations, net of taxes


(25,955)


(18,043)


(1,756)


Net (loss) income


(28,460)


20,994


(49,498)

     Net loss (income) from continuing operations attributable
     to noncontrolling interests


339


(176)


595

     Net loss (income) from discontinued operations attributable
     to noncontrolling interests



250


(622)


518

     Net loss (income) attributable to noncontrolling interests


589


(798)


1,113

Net (loss) income from continuing operations attributable to
stockholders


(2,166)



38,861


(47,147)

Net (loss) income from discontinued operations attributable to
stockholders


(25,705)


(18,665)


(1,238)

Net (loss) income attributable to stockholders


$                (27,871)


$                 20,196



$                (48,385)








Net (loss) income per share attributable to stockholders –
basic:







Continuing operations


$                    (0.01)


$                     0.22


$                    (0.28)

Discontinued operations


$                    (0.15)


$                    (0.11)



$                    (0.01)

Net (loss) income per share – basic


$                    (0.16)


$                     0.11


$                    (0.29)








Net (loss) income per share attributable to stockholders –
diluted:







Continuing operations


$                    (0.01)


$                     0.22



$                    (0.28)

Discontinued operations


$                    (0.15)


$                    (0.11)


$                    (0.01)

Net (loss) income per share – diluted


$                    (0.16)


$                     0.11


$                    (0.29)









Weighted-average shares:







Basic


173,376


173,019


171,200

Diluted


173,376


192,875


171,200


SUNPOWER CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




THREE MONTHS ENDED



April 3, 2022


January 2, 2022


April 4, 2021

Cash flows from operating activities:








Net (loss) income


$               (28,460)


$                20,994


$               (49,498)

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







     Depreciation and amortization


4,665


4,008


2,849


     Stock-based compensation


5,427


6,126


5,437

     Non-cash interest expense


726


947


1,505

     Loss (gain) on equity investments



(1,315)


(68,950)


44,730

     (Gain) loss on sale of investments




(1,162)

     Deferred income taxes


(13,750)



9,797


(3,901)

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




(226)

     Other, net


845


439



(5,054)








     Changes in operating assets and liabilities:







          Accounts receivable


(12,354)


(14,099)


4,114

          Contract assets


(6,519)


6,163



487

          Inventories


(35,081)


(1,567)


(8,271)

          Project assets


2,892


1,581


9,197


          Prepaid expenses and other assets


(86,502)


(21,786)


1,429

          Operating lease right-of-use assets


2,415


2,548


2,875

          Advances to suppliers



(2,222)


225


(3,852)

          Accounts payable and other accrued liabilities


41,444


39,976


(24,152)

          Contract liabilities


22,066



13,736


(13,461)

          Operating lease liabilities


(3,027)


(2,549)


(3,429)

               Net cash (used in) provided by operating
               activities


(108,750)


(2,411)



(40,383)

Cash flows from investing activities:







     Purchases of property, plant and equipment


(8,636)


(6,090)


(1,964)

     Investments in software development costs


(1,521)


(1,051)



     Cash paid for solar power systems




(635)

     Cash received from sale of investments




1,200


     Cash paid for acquisitions, net of cash acquired



(124,200)


     Cash paid for equity investments


(7,000)



     Proceeds from sale of equity investment



149,830



     Cash paid for investments in unconsolidated investees


(154)



               Net cash provided by (used in) investing activities


132,519



(131,341)


(1,399)

Cash flows from financing activities:







     Proceeds from bank loans and other debt


21,458


28,412


71,323

     Repayment of bank loans and other debt


(23,944)



(24,385)


(35,076)

     Repayment of non-recourse residential and commercial
     financing debt




(9,713)

     Purchases of stock for tax withholding obligations on
     vested restricted stock


(7,332)


(2,500)



(2,118)

               Net cash (used in) provided by financing
               activities


(9,818)


1,527


24,416

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





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


13,950


(132,225)


(17,367)

Cash, cash equivalents and restricted cash, beginning of period


148,613


280,838


246,804

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



$              162,563


$              148,613


$              229,437








Reconciliation of cash, cash equivalents, and restricted cash
to the condensed consolidated balance sheets, including
discontinued operations:







     Cash and cash equivalents


142,250


123,735


$              213,105

     Restricted cash and cash equivalents, current portion



681


691


10,928

     Restricted cash and cash equivalents, net of current portion


12,857


14,887


5,404

     Cash, cash equivalents, and restricted cash from
     discontinued operations


6,776



9,300


               Total cash, cash equivalents, and restricted cash


$              162,564


$              148,613


$              229,437








Supplemental disclosure of cash flow information:







     Property, plant and equipment acquisitions funded by
     liabilities


922



(1,210)


1,647

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


877


3,671


11,528

     Fair value of contingent consideration for business
     combination



11,100



     Cash paid for interest


9,874


1,555


11,437

     Cash paid for income taxes


250


2,509


39


Use of Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures. The specific non-GAAP measures listed below are: revenue; gross margin; net loss; net loss per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Management believes that each of these non-GAAP measures are useful to investors, enabling them to better assess changes in each of these key elements of the company’s results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provide investors with another method to assess the company’s operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analysis. Given management’s use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company’s operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; and therefore, should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP gross margin includes adjustments relating to gain/loss on sale and impairment of residential lease assets, litigation, stock-based compensation, and amortization of intangible assets, each of which is described below. In addition to the above adjustments, non-GAAP net loss and non-GAAP net loss per diluted share are adjusted for adjustments relating to mark to market gain on equity investments, gain on business divestitures, impairment of property, plant, and equipment, transaction-related costs, non-cash interest expense, restructuring charges (credits), gain on convertible debt repurchased, tax effect of these non-GAAP adjustments, each of which is described below. In addition to the above adjustments, Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation. 

Non-GAAP Adjustments Based on International Financial Reporting Standards (“IFRS”)
The company’s non-GAAP results include adjustments under IFRS that are consistent with the adjustments made in connection with the company’s internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE, our controlling shareholder and a foreign public registrant that reports under IFRS. Differences between GAAP and IFRS reflected in the company’s non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company’s performance, and assists in aligning the perspectives of the management with those of TotalEnergies SE. 

  • Mark-to-market loss (gain) in equity investments: We recognize adjustments related to the fair value of equity investments with readily determinable fair value based on the changes in the stock price of these equity investments at every reporting period. Under U.S. GAAP, mark-to-market gains and losses due to changes in stock prices for these securities are recorded in earnings while under IFRS, an election can be made to recognize such gains and losses in other comprehensive income. Such an election was made by TotalEnergies SE. Further, we elected the Fair Value Option (“FVO”) for some of our equity method investments, and we adjust the carrying value of those investments based on their fair market value calculated periodically. Such option is not available under IFRS, and equity method accounting is required for those investments. We believe that excluding these adjustments on equity investments is consistent with our internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE. and better reflects our ongoing results.

Other Non-GAAP Adjustments

  • Results of operations of businesses exited/to be exited: We exclude the results of operations of our legacy businesses that we have exited, or to be exited, from our Non-GAAP results. These legacy businesses include our light commercial business that we exited starting this first fiscal quarter of 2022 to reinforce the Company’s strategic direction to focus solely on the residential solar market, Hillsboro, Oregon facility that ceased manufacturing and revenue generation in the first quarter of 2021, as well as, results of our legacy power plant and legacy O&M businesses. We are not doing new activities for these businesses, and the remaining activities comprise of true-up of estimated milestones payments, settlement of certain warranty obligations on projects and other wind-down activities. As such, these are excluded from our non-GAAP results as they are not reflective of our ongoing operating results.
  • Loss/Gain on sale and impairment of residential lease assets: In fiscal 2018 and 2019, in an effort to sell all the residential lease assets owned by us, we sold membership units representing a 49% membership interest in majority of its residential lease business and retained a 51% membership interest. We record an impairment charge based on the expected fair value for a portion of residential lease assets portfolio that was retained. Any charges or credits on these remaining unsold residential lease assets impairment, as well as its corresponding depreciation savings, are excluded from our non-GAAP results as they are not reflective of ongoing operating results.
  • Stock-based compensation: Stock-based compensation relates primarily to our equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. We believe 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.
  • Litigation: We may be involved in various instances of litigation, claims and proceedings that result in payments or recoveries. We exclude gains or losses associated with such events because the gains or losses do not reflect our underlying financial results in the period incurred. We also exclude expenses pertaining to litigation relating to businesses that discontinued as a result of spin-off of Maxeon Solar, for which we are indemnifying them. We believe that it is appropriate to exclude such charges from our non-GAAP results as they are not reflective of ongoing operating results.
  • Transaction-related costs: In connection with material transactions such as acquisition or divestiture of a business, the company incurred transaction costs including legal and accounting fees. We believe that it is appropriate to exclude these costs from our non-GAAP results as they would not have otherwise been incurred as part of the business operations and therefore is not reflective of ongoing operating results.
  • Amortization of intangible assets and software: We incur amortization of intangible assets as a result of acquisitions, primarily from the Blue Raven acquisition, which includes brand, non-compete arrangements, and purchased technology. In addition, we also incur amortization of our capitalized internal-use software costs once the software has been placed into service, until the end of the useful life of the software. We believe that it is appropriate to exclude these amortization charges from our non-GAAP results as they are non-recurring in nature, and are therefore not reflective of ongoing operating results.
  • Executive transition costs: We incur non-recurring charges related to the hiring and transition of new executive officers. During fiscal 2021, we appointed a new chief executive officer, as well as other chief executives, and we are investing resources in those executive transitions, and in developing new members of management as we complete our transformation. We believe that it is appropriate to exclude these from our non-GAAP results as they are not reflective of ongoing operating results.
  • Acquisition-related costs: We incurred certain costs in connection with the acquisition of Blue Raven, that are either paid as part of the transaction or will be paid in the coming year, but are considered post-acquisition compensation under the applicable GAAP framework due to the nature of such items. A majority of the expense incurred in fourth quarter of fiscal 2021 represents cash paid to certain employees of Blue Raven for settlement of their pre-existing share-based payment plan, in excess of the respective fair value. Other post-combination expenses include change in fair value of contingent consideration as well as deferred post-combination employment expense payable to certain Blue Raven employees and sellers. We believe that it is appropriate to exclude these from our non-GAAP results as they are directly related to the acquisition transaction and non-recurring in nature, and are therefore not reflective of ongoing operating results.
  • Business reorganization costs: In connection with the spin-off of Maxeon into an independent, publicly traded company, we incurred and expect to continue to incur, non-recurring charges on third-party legal and consulting expenses, primarily to enable in separation of shared information technology systems and applications. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.
  • Restructuring charges (credits): We incur restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company’s global strategy and improving its overall operating efficiency and cost structure. Although the company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.
  • Tax effect: This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. Our non-GAAP tax amount is based on estimated cash tax expense and reserves. We forecast our 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 our 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, or tax impact of non-recurring items.
  • Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in addition to adjustments described above, we exclude the impact of the following items during the period:
  • Cash interest expense, net of interest income
  • Provision for income taxes

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



April 3, 2022


January 2, 2022


April 4, 2021

GAAP revenue


$                 350,277


347,830


$                 240,135


     Results of operations of businesses exited/to be exited


(14,208)


(318)


(2,198)

Non-GAAP revenue


$                 336,069


347,512


$                 237,937


Adjustments to Gross Profit Margin: 





THREE MONTHS ENDED



April 3, 2022


January 2, 2022


April 4, 2021

GAAP gross profit from continuing operations


$               72,309


$               60,245


$               45,966

Other adjustments:








     Results of operations of businesses exited/to be exited


(260)


1,586


6,911

     Executive transition costs


378



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



(279)


(275)


(494)

     Stock-based compensation expense


899


708


537

Non-GAAP gross profit


$               73,047



$               62,264


$               52,920








GAAP gross margin (%)


20.6%


17.3%


19.1%

Non-GAAP gross margin (%)


21.7%


17.9%



22.2%


Adjustments to Net Income (Loss): 




THREE MONTHS ENDED



April 3, 2022


January 2, 2022


April 4, 2021

GAAP net (loss) income from continuing operations
attributable to stockholders


$                   (2,166)


$                   38,861



$                 (47,147)

Adjustments based on IFRS:







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


(1,315)


(68,950)


44,730

Other adjustments:







     Results of operations of businesses exited/to be exited


2,933



2,661


11,200

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


(279)


(275)


(5,383)

     Litigation


177


(9,311)



5,133

     Stock-based compensation expense


5,329


5,217


4,354

     Amortization of intangible assets and software


1,978


1,579



     Transaction-related costs


964


(22)


200

     Executive transition costs


1,469


1,254


     Business reorganization costs




(129)


954

     Restructuring charges (credits)


186


190


(105)

     Acquisition-related costs


5,808



18,764


     Tax effect


(12,186)


14,257


(3,741)

Non-GAAP net income (loss) attributable to stockholders


$                     2,898


$                     4,096



$                   10,195


Adjustments to Net Income (loss) per diluted share:




THREE MONTHS ENDED



April 3, 2022


January 2, 2022


April 4, 2021

Net income (loss) per diluted share







     Numerator:







          GAAP net (loss) income available to common
          stockholders1



$                   (2,166)


$                  38,861


$                 (47,147)

          Add: Interest expense on 4.00% debenture due 2023,
          net of tax



3,026


          Add: Interest expense on 0.875% debenture due 2021,
          net of tax





          GAAP net income (loss) available to common
          stockholders1


$                   (2,166)


$                  41,887


$                 (47,147)








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


$                    2,898


$                    4,096



$                  10,195








     Denominator:







          GAAP weighted-average shares


173,376


173,019


171,200

          Effect of dilutive securities:







               Restricted stock units




2,788


               0.875% debentures due 2021




               4.00% debentures due 2023



17,068



     GAAP dilutive weighted-average common shares:


173,376


192,875


171,200








          Non-GAAP weighted-average shares


173,376


173,019


171,200


          Effect of dilutive securities:







               Restricted stock units


1,399


2,788


4,113

               4.00% debentures due 2023




17,068


          Non-GAAP dilutive weighted-average common
          shares1


174,775


175,807


192,381








     GAAP dilutive net (loss) income per share – continuing
     operations


$                     (0.01)


$                      0.22


$                     (0.28)

     Non-GAAP dilutive net income (loss) per share –
     continuing operations



$                      0.02


$                      0.02


$                      0.05


1In accordance with the if-converted method, net (loss) income available to common stockholders excludes interest expense related to the 0.875% and 4.00%
debentures if the debentures are considered converted in the calculation of net (loss) income 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



April 3, 2022


January 2, 2022


April 4, 2021


GAAP net (loss) income from continuing operations
attributable to stockholders


$                    (2,166)


$                   38,861


$                  (47,147)

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


(1,315)


(68,950)


44,730

Other adjustments:








     Results of operations of businesses exited/to be exited


2,933


2,661


11,200

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


(279)


(275)


(5,383)

     Litigation



177


(9,311)


5,133

     Stock-based compensation expense


5,329


5,217


4,354

     Amortization of intangible assets and software


1,978



1,579


     Transaction-related costs


964


(22)


200

     Executive transition costs


1,469


1,254



     Business reorganization costs



(129)


954

     Restructuring charges (credits)


186


190


(105)


     Acquisition-related costs


5,808


18,764


     Cash interest expense, net of interest income


4,878


5,141


6,951

     (Benefit from) provision for income taxes



(11,676)


10,242


(5,124)

     Depreciation


2,873


2,508


3,029

Adjusted EBITDA


$                   11,159



$                     7,730


$                   18,792

FY 2022 GUIDANCE 

(in thousands)

FY 2022

Residential Customers

73,000 – 80,000

Residential Adjusted EBITDA/Customer1                        

$2,000 – $2,400


Adjusted EBITDA

$90 million -$110 million

Net Income (GAAP)

$135 million -$155 million

  1. Excluding Product & Digital operating expenses for Residential only.
  2.  Adjusted EBITDA guidance for FY 2022 includes net adjustments that increase GAAP net income by approximately $45 million primarily relating to the following adjustments: stock-based compensation expense, results of operations of businesses exited/to be exited, mark-to-market (gain) loss on equity investments, (gain) loss on business divestitures, net, acquisition-related costs, interest expense, depreciation and amortization, income taxes, and other non-recurring adjustments.

SOURCE SunPower Corp.

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