SunPower Reports First Quarter 2022 Results

• 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 /PRNewswire/ -- 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 Logo. (PRNewsFoto/SunPower Corp.)

"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: