SAN JOSE, Calif., May 7, 2020 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its first quarter ended March 29, 2020.
First Quarter Company Highlights
($ Millions, except percentages and per-share data) | 1st Quarter 2020 | 4th Quarter 2019 | 1st Quarter 2019 |
GAAP revenue | $449.2 | $603.8 | $348.2 |
GAAP gross margin | 8.3% | 15.8% | (10.7)% |
GAAP net income (loss) | $(1.4) | $5.4 | $(89.7) |
GAAP net income (loss) per diluted share | $(0.01) | $0.03 | $(0.63) |
Non-GAAP revenue1 | $454.4 | $607.0 | $411.6 |
Non-GAAP gross margin1 | 12.5% | 20.8% | 6.0% |
Non-GAAP net income (loss)1 | $(17.3) | $35.8 | $(57.4) |
Non-GAAP net income (loss) per diluted share1 | $(0.10) | $0.23 | $(0.41) |
Adjusted EBITDA1 | $9.4 | $71.5 | $(23.8) |
MW Recognized | 538 | 707 | 455 |
Cash2 | $205.5 | $423.0 | $185.6 |
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 |
First Quarter 2020 Results"We had a strong start to the year, exceeding our margin and adjusted EBITDA guidance driven by strong global DG demand and outperformance by our U.S. channels business," said Tom Werner, SunPower CEO and chairman of the board. "However, we have seen a material impact across the industry and our business, caused by the COVID-19 virus pandemic during the second quarter. Our primary focus during this disruption remains on the safety and well-being of our employees, working closely with our partners and maintaining our industry leading customer service levels. Despite the disruption, our fundamentals remain strong and we believe that our differentiated business model, rigorous prioritization of cost containment and continued investment will position the company well post-pandemic."
"Looking forward, we remain very confident in the significant longer term growth opportunity in solar and our investment priorities are consistent with this potential. These investments include our next generation Maxeon technology, Equinox and Helix storage solutions and our digital initiatives. We have also instituted a number of programs that we expect to result in cost and cash savings of up to $100 million in 2020. Finally, we expect to complete our planned company split into two, independently focused, pure-play solar companies by the end of the second quarter pending closing conditions. With further investment in our industry-leading technology and initiatives in place to strengthen our balance sheet, we remain focused on emerging from the current disruption in a much stronger competitive position."
SunPower Energy Services (SPES) "Our channels business had a strong quarter and outperformed on both revenue and installation volume, with deployments up over 50 percent year over year. We further expanded our leadership in new homes with bookings doubling year over year and a growing pipeline of new opportunities. We have seen strong support from our financing partners and remain comfortable with our tax equity and project debt capacity for the balance of the year. Additionally, we recently announced that we have joined forces with Technology Credit Union to fund up to $1 billion in residential solar loans over the next four years. However, we are seeing some softness in the second quarter. Strategically, we have been moving our residential business to a robust digital platform for more than a year. This put us in a strong position to transition our channel rapidly and comprehensively to a virtual sales model when the COVID-19 disruption began. Our transition to digital included expanding customer and dealer adoption of our proprietary digital Design Studio and mySunPower applications that streamline the sales process and improve customer experience. As a result of these efforts, more than 95 percent of our residential sales are now occurring online with little to no customer contact. We believe that our industry leading digital platforms are helping our channel mitigate demand softness in the second quarter."
"In Commercial Direct, we maintained our leading market share, with increased year on year installation volume. We are beginning to see the benefits of our recent restructuring and expect our commercial direct business to return to profitability in the second half of this year. Our origination teams performed well and we now have 90 percent of our 2020 forecast in backlog. Demand for our Helix Storage solution remains strong with a pipeline exceeding $320 million and attach rates in excess of 30 percent. In particular, we are seeing significant traction for storage in California's innovative Self-Generation Incentive Program (SGIP), driven by strong customer interest in resiliency."
SunPower Technologies (SPT)"SPT, the international portion of which will soon be Maxeon Solar Technologies, posted a solid quarter, with year on year shipment growth of 29 percent. Demand growth in DG markets was particularly strong, with DG shipments up 60 percent compared to the first quarter of 2019 and comprising 70 percent of total SPT shipments. While we were impacted by both supply and demand phases of COVID-19 related disruption during the quarter, our supply chain and operations teams were able to achieve record volume shipments and meet our customer's needs. However, while our first quarter performance was strong, we are experiencing a material impact in our results in the second quarter due to the pandemic. Our Performance-Series joint venture is now back to full production with the balance of our manufacturing facilities in operation. We expect our remaining facilities to resume production in the coming weeks and expect to have sufficient existing inventory to meet our commitments for the second quarter," Werner concluded.
Consolidated Financials"Our first quarter performance reflected the strength of our DG market model as well as the early and rapid response to the COVID-19 disruption, including the implementation of our proactive cost control initiatives," said Manavendra Sial, SunPower chief financial officer. "Also, we continued to reduce the leverage of the company as we retired approximately $90 million of convertible debt during the quarter. Additionally, we have implemented a number of initiatives that will result in savings of up to $100 million this year, including initiatives to align our cost structure to the current environment. We remain confident in our financial position as we strengthened our balance sheet and have identified up to $500 million in potential liquidity over the next 12 months, including our $55 million revolver which remains undrawn. While current conditions remain difficult, we believe that with the actions we are taking, we are well positioned for the future," Sial added.
First quarter fiscal year 2020 non-GAAP results exclude net adjustments that, in the aggregate, increased non-GAAP loss by $15.9 million, including $47.9 million related to gain on mark-to-market gain on equity investments. This was partially offset by $10.0 million related to the cost of above-market polysilicon, $7.8 million related to business reorganization costs and restructuring charges, $6.9 million related to stock-based compensation expense, $4.8 million related to construction revenue on solar services contracts, $1.8 million related to amortization of intangible assets, and $0.7 million related to other non-recurring items and tax effects.
Financial OutlookAs previously announced, the company continues to assess the impact of the COVID-19 crisis on its fiscal year 2020 forecasts. As a result, the company will not be providing fiscal year 2020 guidance at this time.
The company's second quarter 2020 GAAP and non-GAAP guidance is as follows: on a GAAP basis, revenue of $290 million to $330 million, gross margin of negative 9 percent to negative 3 percent and net loss of $120 million to $100 million. On a non-GAAP basis, the company expects revenue of $290 million to $330 million, gross margin of 0 percent to 6 percent and megawatt (MW) deployed in the range of 340 MW to 400 MW. The company also expects break even to slightly positive cash generation in the second quarter.
The company expects second quarter 2020 Adjusted EBITDA guidance in the range of negative $40 million to negative $20 million with SPT in the range of negative $25 to $15 million and SPES in the range of negative $10 to $0 million.
The company will host a conference call for investors this afternoon to discuss its first quarter 2020 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at http://investors.sunpower.com/events.cfm
This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its first quarter 2020 performance on the Events and Presentations section of SunPower's Investor Relations page at http://investors.sunpower.com/events.cfm
Forward-Looking StatementsThis 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) the expected financial performance of our business lines, including timing and expectations for returning our Commercial Direct business to profitability; (b) plans and expectations regarding our areas of technology, services, and product development focus, including continued investment plans, and the impact thereof; (c) statements regarding the anticipated spin-off of Maxeon Solar, including timing and certainty, the anticipated achievement of conditions precedent for the transaction and the timing thereof, and Maxeon Solar's preparation to act as an independent entity on the date of spin; (d) anticipated cash savings as the result of our cost-reduction and containment initiatives, including timing, amounts, and expected impacts on our financial performance, liquidity, and our expected competitive and financial positioning post-recovery; (e) our expectations regarding the impacts of Covid-19 on our business, our industry, and our markets, including supply and demand impacts, anticipated recovery, and our expected positioning post-pandemic; (f) our plans and expectations for our products and planned products, including anticipated markets and demand, cost impacts, and impacts on our financial performance and our ability to meet our targets and goals; (g) our expectations regarding our industry, market factors, anticipated including demand and volume; (h) expectations regarding our future performance based on bookings, backlog, and pipelines in our sales channels; (i) our expectations regarding tax equity and project debt capacity and adequacy for the remainder of the year; (j) our expectations for our strategic agreement with Technology Credit Union, and the financial impacts thereof; (k) our expectations regarding resumption of production in certain of our manufacturing facilities, and the sufficiency of our existing inventory to meet our commitments; (l) our expectations regarding 2020 financial performance, including anticipated liquidity; and (m) our second quarter fiscal 2020 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed, 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) challenges in executing transactions key to our strategic plans, including regulatory and other challenges that may arise; (2) potential disruptions to our operations and supply chain that may result from epidemics or natural disasters, including impacts of the Covid-19 pandemic; (3) 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; (4) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (5) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (6) changes in public policy, including the imposition and applicability of tariffs; (7) regulatory changes and the availability of economic incentives promoting use of solar energy; (8) fluctuations in our operating results; (9) appropriately sizing our manufacturing capacity and containing manufacturing and logistics difficulties that could arise; and (10) challenges managing our acquisitions, joint ventures and partnerships, including our ability to successfully manage acquired assets and supplier relationships. In addition, the proposed and the associated investment by TZS in Maxeon Solar may not be consummated within the anticipated period or at all and the ultimate results of any separation depend on a number of factors, including the development of final plans and the impact of local regulatory requirements. 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.
©2020 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) | |||
Mar. 29 | Dec. 29, | ||
2020 | 2019 | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 205,452 | $ 422,955 | |
Restricted cash and cash equivalents, current portion | 29,466 | 26,348 | |
Restricted short-term marketable securities | 6,196 | 6,187 | |
Accounts receivable, net | 243,476 | 226,476 | |
Contract assets | 102,340 | 99,426 | |
Inventories | 391,800 | 358,257 | |
Advances to suppliers, current portion | 98,452 | 107,388 | |
Project assets - plants and land, current portion | 21,581 | 12,650 | |
Prepaid expenses and other current assets | 104,635 | 121,244 | |
Total current assets | 1,203,398 | 1,380,931 | |
Restricted cash and cash equivalents, net of current portion | 9,364 | 9,354 | |
Property, plant and equipment, net | 312,192 | 323,726 | |
Operating lease right-of-use assets | 60,796 | 51,258 | |
Solar power systems leased, net | 53,375 | 54,338 | |
Advances to suppliers, net of current portion | 13,993 | 13,993 | |
Other intangible assets, net | 5,568 | 7,466 | |
Other long-term assets | 338,838 | 330,855 | |
Total assets | $ 1,997,524 | $ 2,171,921 | |
Liabilities and Equity | |||
Current liabilities: | |||
Accounts payable | $ 403,180 | $ 441,759 | |
Accrued liabilities | 165,863 | 203,890 | |
Operating lease liabilities, current portion | 11,424 | 9,463 | |
Contract liabilities, current portion | 126,281 | 138,441 | |
Short-term debt | 124,682 | 104,856 | |
Total current liabilities | 831,430 | 898,409 | |
Long-term debt | 98,095 | 113,827 | |
Convertible debt | 730,637 | 820,259 | |
Operating lease liabilities, net of current portion | 53,740 | 46,089 | |
Contract liabilities, net of current portion | 63,567 | 67,538 | |
Other long-term liabilities | 199,994 | 204,300 | |
Total liabilities | 1,977,463 | 2,150,422 | |
Equity: | |||
Preferred stock | - | - | |
Common stock | 170 | 168 | |
Additional paid-in capital | 2,668,704 | 2,661,819 | |
Accumulated deficit | (2,451,110) | (2,449,679) | |
Accumulated other comprehensive loss | (8,789) | (9,512) | |
Treasury stock, at cost | (199,543) | (192,633) | |
Total stockholders' equity | 9,432 | 10,163 | |
Noncontrolling interests in subsidiaries | 10,629 | 11,336 | |
Total equity | 20,061 | 21,499 | |
Total liabilities and equity | $ 1,997,524 | $ 2,171,921 |
SUNPOWER CORPORATION | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(In thousands, except per share data) | ||||||
(Unaudited) | ||||||
THREE MONTHS ENDED | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
Revenue: | ||||||
SunPower Energy Services | $ 289,869 | $ 352,226 | $ 178,221 | |||
SunPower Technologies | 248,196 | 434,708 | 230,804 | |||
Intersegment eliminations | (88,875) | (183,173) | (60,800) | |||
Total revenue | 449,190 | 603,761 | 348,225 | |||
Cost of revenue: | ||||||
SunPower Energy Services | 259,461 | 306,698 | 171,078 | |||
SunPower Technologies | 257,129 | 369,363 | 282,868 | |||
Intersegment eliminations | (104,848) | (167,439) | (68,436) | |||
Total cost of revenue | 411,742 | 508,622 | 385,510 | |||
Gross profit (loss) | 37,448 | 95,139 | (37,285) | |||
Operating expenses: | ||||||
Research and development | 15,638 | 18,262 | 14,993 | |||
Sales, general and administrative | 65,958 | 70,875 | 62,857 | |||
Restructuring charges (credits) | 1,576 | 8,039 | (665) | |||
(Gain) loss on sale and impairment of residential lease assets | (274) | (2,931) | 9,226 | |||
Gain on business divestiture | - | - | (6,114) | |||
Total operating expenses | 82,898 | 94,245 | 80,297 | |||
Operating income (loss) | (45,450) | 894 | (117,582) | |||
Other income (expense), net: | ||||||
Interest income | 404 | 259 | 852 | |||
Interest expense | (10,537) | (9,489) | (16,791) | |||
Other, net | 55,069 | 28,709 | 33,073 | |||
Other income, net | 44,936 | 19,479 | 17,134 | |||
Income (loss) before income taxes and equity in losses of unconsolidated investees | (514) | 20,373 | (100,448) | |||
Provision for income taxes | (1,869) | (9,388) | (5,797) | |||
Equity in earnings (losses) of unconsolidated investees | 245 | (5,008) | 1,680 | |||
Net income (loss) | (2,138) | 5,977 | (104,565) | |||
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests | 707 | (537) | 14,841 | |||
Net income (loss) attributable to stockholders | $ (1,431) | $ 5,440 | $ (89,724) | |||
Basic net income (loss) per share attributable to stockholders | $ (0.01) | $ 0.04 | $ (0.63) | |||
Diluted net income (loss) per share attributable to stockholders | $ (0.01) | $ 0.03 | $ (0.63) | |||
Basic weighted-average shares | 168,822 | 152,439 | 141,720 | |||
Diluted weighted-average shares | 168,822 | 156,004 | 141,720 |
SUNPOWER CORPORATION | |||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
(In thousands) | |||||||||
(Unaudited) | |||||||||
THREE MONTHS ENDED | |||||||||
Mar. 29, | Dec. 29, | Mar. 31, | |||||||
2020 | 2019 | 2019 | |||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | (2,138) | $ | 5,977 | $ | (104,565) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||||
Depreciation and amortization | 16,892 | 18,059 | 24,190 | ||||||
Stock-based compensation | 6,867 | 8,008 | 5,666 | ||||||
Non-cash interest expense | 1,910 | 2,005 | 2,415 | ||||||
Equity in (earnings) losses of unconsolidated investees | (245) | 5,008 | (1,680) | ||||||
Gain on equity investments | (49,152) | (29,250) | (33,000) | ||||||
Gain on retirement of convertible debt | (2,956) | - | - | ||||||
Gain on business divestiture | - | - | (6,114) | ||||||
Deferred income taxes | (349) | 4,567 | 2,048 | ||||||
(Gain) loss on sale and Impairment of residential lease assets | 289 | (2,931) | 9,226 | ||||||
Gain on sale of assets | - | (3,829) | - | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (17,880) | (20,484) | 12,196 | ||||||
Contract assets | 295 | (20,139) | 1,712 | ||||||
Inventories | (43,061) | (20,311) | (41,718) | ||||||
Project assets | (8,881) | 7,050 | 776 | ||||||
Prepaid expenses and other assets | 18,635 | (10,228) | 11,727 | ||||||
Operating lease right-of-use assets | 2,923 | 2,311 | 2,603 | ||||||
Long-term financing receivables, net | - | - | (1,611) | ||||||
Advances to suppliers | 8,936 | 16,899 | 13,055 | ||||||
Accounts payable and other accrued liabilities | (92,599) | 15,384 | (28,819) | ||||||
Contract liabilities | (16,130) | 19,404 | (14,578) | ||||||
Operating lease liabilities | (2,849) | (1,752) | (2,559) | ||||||
Net cash used in operating activities | (179,493) | (4,252) | (149,030) | ||||||
Cash flows from investing activities: | |||||||||
Purchases of property, plant and equipment | (6,213) | (12,295) | (6,548) | ||||||
Cash paid for solar power systems | (610) | (1,458) | (27,600) | ||||||
Proceeds from business divestiture | - | - | 9,677 | ||||||
Proceeds from sale of assets | - | 20,000 | - | ||||||
Cash outflow from sale of residential lease portfolio, net of cash received | - | 5,474 | - | ||||||
Proceeds from sale of distribution rights of debt refinancing | - | 1,950 | - | ||||||
Proceeds from sale of equity investment and partial return of capital by an unconsolidated investee | 46,149 | - | - | ||||||
Net cash provided by (used in) investing activities | 39,326 | 13,671 | (24,471) | ||||||
Cash flows from financing activities: | |||||||||
Proceeds from bank loans and other debt | 76,544 | 150,439 | 67,979 | ||||||
Repayment of bank loans and other debt | (65,730) | (61,920) | (58,372) | ||||||
Proceeds from issuance of non-recourse residential financing, net of issuance costs | - | - | 22,255 | ||||||
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects | - | 4,371 | 20,987 | ||||||
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs | 9,754 | 3,004 | - | ||||||
Payment for prior business combination | - | (30,000) | - | ||||||
Proceeds of common stock equity offering, net of offering costs | - | 171,834 | - | ||||||
Cash paid for repurchase of convertible debt | (87,141) | - | - | ||||||
Settlement of contingent consideration arrangement, net of cash received | 423 | 802 | (2,448) | ||||||
Equity offering costs paid | (928) | - | - | ||||||
Purchases of stock for tax withholding obligations on vested restricted stock | (6,914) | (908) | (3,872) | ||||||
Net cash (used in) provided by financing activities | (73,992) | 237,622 | 46,529 | ||||||
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (216) | 881 | 112 | ||||||
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | (214,375) | 247,922 | (126,860) | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period | 458,657 | 210,735 | 363,763 | ||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period | $ | 244,282 | $ | 458,657 | $ | 236,903 | |||
Non-cash transactions: | |||||||||
Costs of solar power systems sourced from existing inventory | $ | - | $ | 21,173 | $ | 16,406 | |||
Costs of solar power systems funded by liabilities | $ | 1,184 | $ | 2,671 | $ | 4,553 | |||
Property, plant and equipment acquisitions funded by liabilities | $ | 2,385 | $ | 13,745 | $ | 10,792 | |||
Contractual obligations satisfied by inventory | $ | 975 | $ | 1,701 | $ | - | |||
Right-of-use assets obtained in exchange of lease obligations | $ | 12,461 | $ | 7,398 | $ | 81,525 | |||
Holdback related to business divestiture | $ | - | $ | 1,927 | $ | - | |||
Receivables in connection with sale of residential lease portfolio | $ | - | $ | 2,570 | $ | - | |||
Aged supplier financing balances reclassified from accounts payable to short-term debt | $ | 5,000 | $ | 22,500 | $ | - |
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 revenue includes adjustments relating to legacy utility and power plant projects and construction revenue on solar service contracts, each of which is described below. In addition to the above adjustments, non-GAAP gross margin includes adjustments relating to legacy sale-leaseback transactions, business process improvement costs, gain/loss on sale and impairment of residential lease assets, cost of above-market polysilicon, litigation, stock-based compensation, amortization of intangible assets, and business reorganization costs, 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 divestiture, 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 Total S.A., 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 Total S.A.
Other Non-GAAP Adjustments
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 | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
GAAP revenue | $ 449,190 | $ 603,761 | $ 348,225 | |||
Adjustments based on IFRS: | ||||||
Legacy utility and power plant projects | (207) | (44) | (171) | |||
Other adjustments: | ||||||
Construction revenue on solar services contracts | 5,392 | 3,235 | 63,505 | |||
Non-GAAP revenue | $ 454,375 | $ 606,952 | $ 411,559 | |||
Adjustments to Gross Profit (Loss) / Margin: | ||||||
THREE MONTHS ENDED | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
GAAP gross profit (loss) | $ 37,448 | $ 95,139 | $ (37,285) | |||
Adjustments based on IFRS: | ||||||
Legacy utility and power plant projects | (34) | - | 116 | |||
Legacy sale-leaseback transactions | 20 | (75) | (823) | |||
Other adjustments: | ||||||
Business process improvement costs | 2,464 | 1,091 | - | |||
Construction revenue on solar service contracts | 4,735 | 1,966 | 11,386 | |||
Gain on sale and impairment of residential lease assets | (448) | (435) | (125) | |||
Cost of above-market polysilicon | 10,043 | 27,549 | 49,428 | |||
Litigation | (163) | (2,515) | - | |||
Stock-based compensation expense | 1,109 | 1,559 | 168 | |||
Amortization of intangible assets | 1,785 | 1,783 | 1,786 | |||
Business reorganization costs | 5 | - | - | |||
Non-GAAP gross profit | $ 56,964 | $ 126,062 | $ 24,651 | |||
GAAP gross margin (%) | 8.3% | 15.8% | -10.7% | |||
Non-GAAP gross margin (%) | 12.5% | 20.8% | 6.0% | |||
Adjustments to Net income (loss): | ||||||
THREE MONTHS ENDED | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
GAAP net income (loss) attributable to stockholders | $ (1,431) | $ 5,440 | $ (89,724) | |||
Adjustments based on IFRS: | ||||||
Legacy utility and power plant projects | (34) | - | 116 | |||
Legacy sale-leaseback transactions | 20 | (75) | 4,911 | |||
Mark-to-market gain on equity investments | (47,871) | (28,250) | (33,000) | |||
Other adjustments: | ||||||
Business process improvements costs | 2,464 | 1,091 | - | |||
Construction revenue on solar services contracts | 4,735 | 1,966 | (3,740) | |||
(Gain) loss on sale and impairment of residential lease assets | (722) | (3,366) | 8,313 | |||
Impairment of property, plant and equipment | - | 4,053 | - | |||
Cost of above-market polysilicon | 10,043 | 27,549 | 49,428 | |||
Litigation | 321 | (2,509) | - | |||
Stock-based compensation expense | 6,867 | 8,006 | 5,666 | |||
Amortization of intangible assets | 1,786 | 1,783 | 1,786 | |||
Gain on business divestiture | - | - | (6,114) | |||
Transaction-related costs | 481 | 1,723 | 1,422 | |||
Business reorganization costs | 6,193 | 10,696 | 2,649 | |||
Non-cash interest expense | - | 3 | 10 | |||
Restructuring charges (credits) | 1,576 | 8,039 | (665) | |||
Gain on convertible debt repurchased | (2,956) | - | - | |||
Tax effect | 1,247 | (384) | 1,518 | |||
Non-GAAP net income (loss) attributable to stockholders | $ (17,281) | $ 35,765 | $ (57,424) | |||
Adjustments to Net income (loss) per diluted share: | ||||||
THREE MONTHS ENDED | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
Net income (loss) per diluted share | ||||||
Numerator: | ||||||
GAAP net income (loss) available to common stockholders | $ (1,431) | $ 5,440 | $ (89,724) | |||
Non-GAAP net income (loss) available to common stockholders | $ (17,281) | $ 35,765 | $ (57,424) | |||
Denominator: | ||||||
GAAP weighted-average shares | 168,822 | 152,439 | 141,720 | |||
Effect of dilutive securities: | ||||||
Restricted stock units | - | 3,565 | - | |||
GAAP dilutive weighted-average common shares: | 168,822 | 156,004 | 141,720 | |||
Non-GAAP weighted-average shares1 | 168,822 | 152,439 | 141,720 | |||
Effect of dilutive securities: | ||||||
Restricted stock units | - | 3,565 | - | |||
Non-GAAP dilutive weighted-average shares1 | 168,822 | 156,004 | 141,720 | |||
GAAP net income (loss) per diluted share | $ (0.01) | $ 0.03 | $ (0.63) | |||
Non-GAAP net income (loss) per diluted share | $ (0.10) | $ 0.23 | $ (0.41) | |||
1 In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 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 | ||||||
Mar. 29, | Dec. 29, | Mar. 31, | ||||
2020 | 2019 | 2019 | ||||
GAAP net income (loss) attributable to stockholders | $ (1,431) | $ 5,440 | $ (89,724) | |||
Adjustments based on IFRS: | ||||||
Legacy utility and power plant projects | (34) | - | 116 | |||
Legacy sale-leaseback transactions | 20 | (75) | 4,911 | |||
Mark-to-market gain on equity investment | (47,871) | (28,250) | (33,000) | |||
Other adjustments: | ||||||
Business process improvement costs | 2,464 | 1,091 | - | |||
Construction revenue on solar services contracts | 4,735 | 1,966 | (3,740) | |||
(Gain) loss on sale and impairment of residential lease assets | (722) | (3,366) | 8,313 | |||
Impairment of property, plant and equipment | - | 4,053 | - | |||
Cost of above-market polysilicon | 10,043 | 27,549 | 49,428 | |||
Litigation | 321 | (2,509) | - | |||
Stock-based compensation expense | 6,867 | 8,006 | 5,666 | |||
Amortization of intangible assets | 1,786 | 1,783 | 1,786 | |||
Gain on business divestiture | - | - | (6,114) | |||
Transaction-related costs | 481 | 1,723 | 1,422 | |||
Business reorganization costs | 6,193 | 10,696 | 2,649 | |||
Non-cash interest expense | - | 3 | 10 | |||
Restructuring charges (credits) | 1,576 | 8,039 | (665) | |||
Gain on convertible debt repurchased | (2,956) | - | - | |||
Cash interest expense, net of interest income | 10,133 | 9,229 | 10,206 | |||
Provision for income taxes | 1,868 | 9,388 | 5,797 | |||
Depreciation | 15,896 | 16,773 | 19,181 | |||
Adjusted EBITDA | $ 9,369 | $ 71,539 | $ (23,758) |
Q2 2020 GUIDANCE
(in thousands except percentages) | Q2 2020 |
Revenue (GAAP) | $290,000-$330,000 |
Revenue (non-GAAP) | $290,000-$330,000 |
Gross margin (GAAP) | (9%) - (3%) |
Gross margin (non-GAAP)1 | 0% - 6% |
Net loss (GAAP) | $(120,000)-$(100,000) |
Adjusted EBITDA2 | $(40,000)-$(20,000) |
1. | Estimated non-GAAP amounts above for Q2 2020 include net adjustments that increase gross margin by approximately $25 million related to cost of above-market polysilicon, $1 million related to stock-based compensation expense and $2 million related to amortization of intangible assets. |
2. | Estimated Adjusted EBITDA amounts above for Q2 2020 include net adjustments that decrease net loss by approximately $25 million related to cost of above-market polysilicon, $17 million related to depreciation, $17 million in business reorganization costs and restructuring charges, $8 million related to stock-based compensation expense, $8 million related to interest expense, $3 million related to income taxes and $2 million related to amortization of intangible assets. |
SUPPLEMENTAL DATA(In thousands, except percentages)
The following supplemental data represent the adjustments that are included or excluded from SunPower's non-GAAP revenue, gross profit/margin, net income (loss) and net income (loss) per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.
SUNPOWER CORPORATION | |||||||||||||||||||||||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED | |||||||||||||||||||||||||||||||||||
March 29, 2020 | |||||||||||||||||||||||||||||||||||
Revenue | Gross profit / margin | Operating expenses | Other income (expense), net | Provision for income taxes | Net income (loss) attributable to stockholders | ||||||||||||||||||||||||||||||
SunPower Energy Services | SunPower Technologies | Intersegment eliminations | SunPower Energy Services | SunPower Technologies | Intersegment eliminations | Research and development | Sales, general and administrative | Restructuring charges | (Gain)/loss on sale and impairment of residential lease assets | ||||||||||||||||||||||||||
GAAP | $ 289,869 | $ 248,196 | $ (88,875) | $ 30,408 | 10.5% | $ (8,933) | -3.6% | $ 15,973 | $ (1,431) | ||||||||||||||||||||||||||
Adjustments based on IFRS: | |||||||||||||||||||||||||||||||||||
Legacy utility and power plant projects | - | (207) | - | - | (34) | - | - | - | - | - | - | - | (34) | ||||||||||||||||||||||
Legacy sale-leaseback transactions | - | - | - | 20 | - | - | - | - | - | - | - | - | 20 | ||||||||||||||||||||||
Mark-to-market gain on equity investments | - | - | - | - | - | - | - | - | - | - | (47,871) | - | (47,871) | ||||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||||
Business process improvement costs | - | - | - | - | 2,464 | - | - | - | - | - | - | - | 2,464 | ||||||||||||||||||||||
(Gain)/loss on sale and impairment of residential lease assets | - | - | - | (448) | - | - | - | - | - | (274) | - | - | (722) | ||||||||||||||||||||||
Construction revenue on solar services contracts | 5,392 | - | - | 4,735 | - | - | - | - | - | - | - | - | 4,735 | ||||||||||||||||||||||
Cost of above-market polysilicon | - | - | - | - | 17,253 | (7,210) | - | - | - | - | - | - | 10,043 | ||||||||||||||||||||||
Litigation | - | - | - | - | (164) | - | - | 485 | - | - | - | - | 321 | ||||||||||||||||||||||
Stock-based compensation expense | - | - | - | 559 | 551 | - | 760 | 4,997 | - | - | - | - | 6,867 | ||||||||||||||||||||||
Amortization of intangible assets | - | - | - | - | 1,785 | - | - | - | - | - | - | - | 1,785 | ||||||||||||||||||||||
Business reorganization costs | - | - | - | - | 5 | - | 513 | 5,676 | - | - | - | - | 6,194 | ||||||||||||||||||||||
Transaction-related costs | - | - | - | - | - | - | - | 481 | - | - | - | - | 481 | ||||||||||||||||||||||
Restructuring charges | - | - | - | - | - | - | - | - | 1,576 | - | - | - | 1,576 | ||||||||||||||||||||||
Gain on convertible debt repurchased | - | - | - | - | - | - | - | - | - | - | (2,956) | - | (2,956) | ||||||||||||||||||||||
Tax effect | - | - | - | - | - | - | - | - | - | - | - | 1,247 | 1,247 | ||||||||||||||||||||||
Non-GAAP | $ 295,261 | $ 247,989 | $ (88,875) | $ 35,274 | 11.9% | $ 12,927 | 5.2% | $ 8,763 | $ (17,281) | ||||||||||||||||||||||||||
December 29, 2019 | |||||||||||||||||||||||||||||||||||
Revenue | Gross profit / margin | Operating expenses | Other income (expense), net | Provision for income taxes | Equity in earnings of unconsolidated investees | Net income (loss) attributable to stockholders | |||||||||||||||||||||||||||||
SunPower Energy Services | SunPower Technologies | Intersegment eliminations | SunPower Energy Services | SunPower Technologies | Intersegment eliminations | Research and development | Sales, general and administrative | Restructuring charges | (Gain)/loss on sale and impairment of residential lease assets | ||||||||||||||||||||||||||
GAAP | $ 352,226 | $ 434,708 | $ (183,173) | $ 45,528 | 12.9% | $ 65,345 | 15.0% | $ (15,734) | $ 5,440 | ||||||||||||||||||||||||||
Adjustments based on IFRS: | |||||||||||||||||||||||||||||||||||
Legacy utility and power plant projects | - | (44) | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||
Legacy sale-leaseback transactions | - | - | - | (75) | - | - | - | - | - | - | - | - | - | (75) | |||||||||||||||||||||
Mark-to-market gain on equity investments | - | - | - | - | - | - | - | - | - | - | (29,250) | - | 1,000 | (28,250) | |||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||||
Business process improvement costs | - | - | - | - | 1,091 | - | - | - | - | - | - | - | - | 1,091 | |||||||||||||||||||||
(Gain)/loss on sale and impairment of residential lease assets | - | - | - | (435) | - | - | - | - | - | (2,931) | - | - | - | (3,366) | |||||||||||||||||||||
Construction revenue on solar services contracts | 3,235 | - | - | 1,966 | - | - | - | - | - | - | - | - | - | 1,966 | |||||||||||||||||||||
Impairment of property, plant & equipment | - | - | - | - | - | - | - | - | - | - | - | - | 4,053 | 4,053 | |||||||||||||||||||||
Cost of above-market polysilicon | - | - | - | - | 29,181 | (1,632) | - | - | - | - | - | - | - | 27,549 | |||||||||||||||||||||
Litigation | - | - | - | 709 | (3,224) | - | - | 6 | - | - | - | - | - | (2,509) | |||||||||||||||||||||
Stock-based compensation expense | - | - | - | 1,020 | 539 | - | 824 | 5,623 | - | - | - | - | - | 8,006 | |||||||||||||||||||||
Amortization of intangible assets | - | - | - | - | 1,783 | - | - | - | - | - | - | - | - | 1,783 | |||||||||||||||||||||
Business reorganization costs | - | - | - | - | - | - | 569 | 10,127 | - | - | - | - | - | 10,696 | |||||||||||||||||||||
Transaction-related costs | - | - | - | - | - | - | - | 1,723 | - | - | - | - | - | 1,723 | |||||||||||||||||||||
Non-cash interest expense | - | - | - | - | - | - | - | 3 | - | - | - | - | - | 3 | |||||||||||||||||||||
Restructuring charges | - | - | - | - | - | - | - | - | 8,039 | - | - | - | - | 8,039 | |||||||||||||||||||||
Tax effect | - | - | - | - | - | - | - | - | - | - | - | (384) | - | (384) | |||||||||||||||||||||
Non-GAAP | $ 355,461 | $ 434,664 | $ (183,173) | $ 48,713 | 13.7% | $ 94,715 | 21.8% | $ (17,366) | $ 35,765 | ||||||||||||||||||||||||||
March 31, 2019 | |||||||||||||||||||||||||||||||||||
Revenue | Gross profit / margin | Operating expenses | Other income (expense), net | Benefit from (provision for) income taxes | Gain (Loss) attributable to non-controlling interests | Net income (loss) attributable to stockholders | |||||||||||||||||||||||||||||
SunPower Energy Services | SunPower Technologies | Intersegment eliminations | SunPower Energy Services | SunPower Technologies | Intersegment eliminations | Research and development | Sales, general and administrative | Restructuring credits | Impairment of residential lease assets | Gain on business divestiture | |||||||||||||||||||||||||
GAAP | $ 178,221 | $ 230,804 | $ (60,800) | $ 7,143 | 4.0% | $ (52,064) | -22.6% | $ 7,636 | $ (89,724) | ||||||||||||||||||||||||||
Adjustments based on IFRS: | |||||||||||||||||||||||||||||||||||
Legacy utility and power plant projects | - | (171) | - | 125 | (9) | - | - | - | - | - | - | - | - | - | 116 | ||||||||||||||||||||
Legacy sale-leaseback transactions | - | - | - | (824) | 1 | - | - | - | - | - | - | 5,734 | - | - | 4,911 | ||||||||||||||||||||
Mark-to-market gain on equity investments | - | - | - | - | - | - | - | - | - | - | - | (33,000) | - | - | (33,000) | ||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||||
Impairment of residential lease assets | - | - | - | (125) | - | - | - | - | - | 9,226 | - | - | - | (788) | 8,313 | ||||||||||||||||||||
Construction revenue on solar services contracts | 63,505 | - | - | 11,386 | - | - | - | - | - | - | - | - | - | (15,126) | (3,740) | ||||||||||||||||||||
Cost of above-market polysilicon | - | - | - | - | 49,428 | - | - | - | - | - | - | - | - | - | 49,428 | ||||||||||||||||||||
Stock-based compensation expense | - | - | - | 168 | - | - | 593 | 4,905 | - | - | - | - | - | - | 5,666 | ||||||||||||||||||||
Amortization of intangible assets | - | - | - | - | 1,786 | - | - | - | - | - | - | - | - | - | 1,786 | ||||||||||||||||||||
Gain on business divestiture | - | - | - | - | - | - | - | - | - | - | (6,114) | - | - | - | (6,114) | ||||||||||||||||||||
Business reorganization costs | - | - | - | - | - | - | - | 2,649 | - | - | - | - | - | - | 2,649 | ||||||||||||||||||||
Transaction-related costs | - | - | - | - | - | - | - | 1,422 | - | - | - | - | - | - | 1,422 | ||||||||||||||||||||
Non-cash interest expense | - | - | - | - | - | - | - | 10 | - | - | - | - | - | - | 10 | ||||||||||||||||||||
Restructuring charges (credits) | - | - | - | - | - | - | - | - | (665) | - | - | - | - | - | (665) | ||||||||||||||||||||
Tax effect | - | - | - | - | - | - | - | - | - | - | - | - | 1,518 | - | 1,518 | ||||||||||||||||||||
Non-GAAP | $ 241,726 | $ 230,633 | $ (60,800) | $ 17,873 | 7.4% | $ (858) | -0.4% | $ 7,636 | $ (57,424) | ||||||||||||||||||||||||||
View original content to download multimedia:http://www.prnewswire.com/news-releases/sunpower-reports-first-quarter-2020-results-301055238.html
SOURCE SunPower Corp.