FOR IMMEDIATE RELEASE
Contacts:
Bob Okunski
SunPower Corporation
408-240-5447
Manny Hernandez
SunPower Corporation
408-240-5560
SunPower Reports Record Second-Quarter 2008 Results
Company Raises FY 2008 and FY 2009 Guidance
| · | Generated second quarter 2008 revenue of $382.8 million, up 120% year-on-year |
| · | Achieved $0.34 GAAP net income per share, $0.61 non-GAAP |
| · | Announced agreement with Florida Power & Light in July for two projects totaling 35 megawatts |
| · | Began site preparation for a 1 gigawatt solar cell fab in Malaysia |
| · | On track with 50% cost reduction plan, Q2 reductions in cell, module, materials and systems costs |
| · | More than 300 dealers worldwide serving the residential and small-commercial rooftop market |
| · | Announced world-record 23.4% efficient, full-scale prototype Gen 3 solar cell |
| · | Announced the appointment of Marty Neese as chief operating officer |
SAN JOSE, Calif., July 17, 2008 – SunPower Corporation (NASDAQ: SPWR) today announced financial results for the second quarter 2008, which ended June 29, 2008. This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent figures on the final page of this press release. Please note that the company has posted additional, supplemental information related to its second quarter 2008 performance on the Events and Presentations section of the Investor Relations page on the SunPower website at www.sunpowercorp.com.
Revenue for the 2008 second quarter was $382.8 million, up 40% from prior-quarter revenue of $273.7 million and up 120% from year-ago second-quarter revenue of $173.8 million. The Components and Systems segments accounted for 29% and 71% of second quarter revenue, respectively.
For reporting purposes, the Systems segment generally represents products and services sold directly to the system owner. Additionally, both SunPower and third-party solar panels sold through the Systems segment channels are recorded as Systems segment revenue. The Components segment primarily represents products sold to installers and resellers.
On a GAAP basis, for the 2008 second quarter, SunPower reported gross margin of 24.3%, total operating income of $45.0 million and diluted net income per share of $0.34. These figures include non-cash operating expenses for amortization of purchase accounting intangible assets of $4.0 million and non-cash, stock-based compensation of $18.6 million.
On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets and stock-based compensation, SunPower reported total gross margin of 26.4%, operating income of $67.6 million and diluted net income per share of $0.61. This compares with prior-quarter non-GAAP gross margin of 24.0%, total operating income of $39.1 million and $0.39 diluted net income per share. Overall gross margin rose sequentially benefitting from a 630 basis point improvement in the Components segment. Components gross margin rose to 31.7% due to lower silicon costs, higher volume and stable to slightly higher average selling prices. Additionally, the systems segment posted a gross margin of 24.2% reflecting a higher percentage of SunPower panels and cost reduction in field construction. Looking forward to the third and fourth quarter, the company expects continued improvement in company gross margin.
“In 2008, SunPower has achieved the geographic and market segment diversity that provides us with tremendous flexibility to respond to new opportunities and minimize risk, such as the uncertainty our industry currently faces in the U.S. and Spanish markets,” said Tom Werner, SunPower’s CEO. “We have built the infrastructure to deliver our high-efficiency solar technology to customers on four continents from residential rooftops to large-scale utility systems. With our Gen 2 cell lines ramping and further expansion of our manufacturing capabilities, we are beginning to tap unserved demand for our high-efficiency solar systems in Korea, Japan, Australia, Germany, Italy, and neighboring areas in Europe. The overall global business environment remains very favorable as we continue to execute on our long-term strategy focused on brand, technology, cost and people. We are well-positioned for success entering the second half of the year.
“In the second quarter, SunPower benefitted from strong customer demand across multiple geographies including our Systems business segment. In addition to our power plant installations in Spain, we saw the dedication of a 1.4 megawatt project in Korea as well as the announcement of our framework agreement with Enfinity Management SPRL to supply 25 megawatts of projects in Italy by the end of 2009. Demonstrating SunPower’s ability to offer solar at utility-scale, we announced an agreement with Florida Power & Light (FPL) for the largest photovoltaic power plant in the United States. Our agreements with FPL include both a 25 megawatt plant in DeSoto County, Fla., as well as a 10 megawatt plant at the Kennedy Space Center. Our power plant customers value SunPower’s delivery of the highest-efficiency solar panels, high-energy collection systems technology, a decade of large-scale systems deployment experience, and a low levelized cost of energy (LCOE).
“In our Components business segment, we continued to see strong demand worldwide. We more than doubled the number of our European dealers and further grew our dealer base in the United States. SunPower now has more than 300 dealers worldwide serving the residential and small-commercial rooftop market. Our multi-channel approach, vertically integrated business model and diversified customer base gives us a competitive advantage and will enable us to capitalize on the further adoption of solar as an alternative to conventional electricity generation.
“SunPower continued to extend its technology lead during the quarter as we announced our world-record, 23.4 percent efficiency, prototype Generation 3 solar cell. This technology, expected to be in production in approximately two years, is a key element in our roadmap to reduce total systems costs to compete with wholesale and retail electric rates by 2012. Also, in order to meet expected future demand and scale economies to reach our cost reduction goals, SunPower announced plans to build its third solar cell manufacturing facility in Malaysia which, when completed, will have a nameplate capacity in excess of 1 gigawatt.
“Our cost reduction plans are on target for silicon procurement as well. We saw our silicon unit costs materially decline in the second quarter as we started to realize the benefit of our portfolio approach to silicon supply,” continued Werner. “With all of our silicon suppliers delivering according to contract, we expect our silicon supply costs to continue to decline and remain fully contracted for our silicon needs through 2010. Per plan, SunPower also benefitted from reductions in cell manufacturing and module costs, improved materials sourcing and more efficient project management including the deployment of our next-generation SunPower® T20 Tracker at our power plant projects in Spain.
“With the decline in our silicon costs, further improvements in our manufacturing efficiency and continued progress in reducing downstream installation costs, we remain on track to achieve our target financial model of 30% gross margin, 10% operating expenses and 20% operating margin, on a non-GAAP basis, no later than the first quarter of 2009. We are also on track to realize our mission of reducing installed systems cost by 50% from 2006 to 2012.
“Based on the strong demand trends in both existing and emerging markets and continued progress on our 50 percent reduction in installed system costs, we are raising our guidance for the fiscal year 2008 and expect the following non-GAAP results: Total revenue of $1.39 billion to $1.44 billion and diluted net income per share of $2.26 to $2.36. We also expect our 2009 total revenue to be in of the range of $2.0 billion to $2.1 billion, production capacity of 450+ megawatts and non-GAAP diluted net income per share of at least $3.50. Consistent with our practice of offering guidance for the current quarter, we expect third quarter 2008 non-GAAP total revenue of $340 million to $355 million, company non-GAAP gross margin of 26.5% to 27.5% and non-GAAP diluted net income per share of $0.53 to $0.57.1
“On a business segment basis, we expect the following non-GAAP results for the third quarter 2008: Components segment revenue of $155 million to $160 million, and gross margin of 33.5% to 34.5%; Systems segment revenue of $185 million to $195 million and gross margin of 21.5% to 22%. We expect the Components segment to benefit from the continued manufacturing ramp of our next-generation technology and lower silicon cost and the Systems segment to reflect a combination of changes in project and regional mix.2
“For the fourth quarter of 2008, we expect non-GAAP total revenue of $395 million to $425 million, reflecting an anticipated increase in both our Components and Systems segment revenue, company non-GAAP gross margin of 29% to 30%, in line with the company’s long-term model, and non-GAAP diluted net income per share of $0.73 to $0.80. For the fourth quarter 2008, we expect Components segment revenue of $200 million to $210 million, and gross margin of 35% to 36% and Systems segment revenue of $195 million to $215 million and gross margin of 23% to 23.5%,” concluded Werner.3
About SunPower
SunPower Corporation (Nasdaq: SPWR) designs, manufactures and delivers high-performance solar-electric systems worldwide for residential, commercial and utility-scale power plant customers. SunPower high-efficiency solar cells and solar panels generate up to 50 percent more power than conventional solar technologies and have a uniquely attractive, all-black appearance. With headquarters in San Jose, Calif., SunPower has offices in North America, Europe and Asia. For more information, visit www.sunpowercorp.com. SunPower is a majority-owned subsidiary of Cypress Semiconductor Corp. (NYSE: CY).
1 For the full year 2008, we expect the following total company GAAP results: Revenue of $1.39 billion to $1.44 billion and diluted net income per share of $1.16 to $1.26. For the full year 2009, we expect the following total company GAAP results: Revenue of $2.0 billion to $2.1 billion and diluted net income per share of at least $2.36. For the third quarter of 2008, we expect the following total company GAAP results: Revenue of $340 million to $355 million; gross margin of approximately 24.0 percent to 25.0 percent and diluted net income per share of $0.26 to $0.30.
2 For the third quarter of 2008, we expect the Components business segment to generate GAAP revenue of $155 million to $160 million and gross margin of approximately 30.2 percent to 31.2 percent and the Systems business segment to generate GAAP revenue of $185 million to $195 million and gross margin of approximately 19.3 percent to 19.8 percent.
3 For the fourth quarter of 2008, we expect the following total company GAAP results: Revenue of $395 million to $425 million; gross margin of approximately 26.2 percent to 27.2 percent and diluted net income per share of $0.40 to $0.47. For the fourth quarter of 2008, we expect the Components business segment to generate GAAP revenue of $200 million to $210 million and gross margin of approximately 31.8 percent to 32.8 percent and the Systems business segment to generate GAAP revenue of $195 million to $215 million and gross margin of approximately 20.7 percent to 21.2 percent.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not represent historical facts. The company uses words and phrases such as “guidance,” “looking forward,” “expects,” flexibility,” “further,” “to supply,” “to compete,” “will,” “expected,” “roadmap,” “plans,” “continue,” “to achieve,” “trends,” “to benefit,” “to reflect,” “anticipated,” and similar expressions to identify forward-looking statements. Forward-looking statements in this press release include, but are not limited to, the company's plans and expectations regarding: (a) continued improvement in overall gross margin; (b) flexibility to respond to new opportunities and minimize risk such as the uncertainty our industry currently faces in the U.S. and Spanish markets; (c) further expansion of our manufacturing capabilities; (d) unserved demand for our high-efficiency solar systems in Korea, Japan, Australia, Germany, Italy and neighboring areas in Europe; (e) the company’s future supply of 25 megawatts of projects in Italy by the end of 2009 under its framework agreement with Enfinity Management SPRL; (f) agreements with Florida Power and Light to build photovoltaic power plants in DeSoto County and at the Kennedy Space Center; (g) the company’s capitalizing on the further adoption of solar as an alternative to traditional electricity generation; (h) Generation 3 solar cell technology being in production in approximately two years, (i) reducing total system costs by 50% from 2006 to 2012 to compete with wholesale and retail electric rates;(j) future demand; (k) building the third solar cell manufacturing facility in Malaysia which, when completed, will have a nameplate capacity in excess of 1 gigawatt; (l) silicon supply costs continuing to decline; (m) remaining fully contracted for our silicon needs through 2010; (n) achieving target financial model of 30% gross margin, 10% operating expenses and 20% operating margin, on a non-GAAP basis, no later than the first quarter of 2009; (o) demand trends; (p) the company achieving certain GAAP and non-GAAP results, including (1) total revenue and diluted net income per share for fiscal year 2008 and 2009, (2) total revenue, gross margin, and diluted net income per share for the third quarter of fiscal year 2008, (3) Components segment and Systems segment revenue and gross margin for the third quarter of fiscal year 2008, (4) total revenue, gross margin, and diluted net income per share for the fourth quarter of fiscal year 2008, and (5) Components segment and Systems segment revenue and gross margin for the fourth quarter of fiscal year 2008; and (q) production capacity of 450+ megawatts for 2009. These forward-looking statements are based on information available to the company as of the date of this release and management’s current expectations, forecasts and assumptions, and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond the company's control. In particular, risks and uncertainties that could cause actual results to differ include: (i) the company’s ability to obtain an adequate supply of polysilicon, ingots and wafers to manufacture its products and the price it pays for such materials; (ii) business and economic conditions and growth trends in the solar power industry; (iii) the continuation of governmental and related economic incentives promoting the use of solar power; (iv) the continued availability of third-party financing arrangements for the company’s customers; (v) construction difficulties or potential delays in the project implementation process; (vi) unanticipated delays or difficulties securing necessary permits, licenses or other governmental approvals; (vii) the risk of continuation of supply of products and components from suppliers; (viii) unanticipated problems with deploying the system on the sites; (ix) the company’s ability to ramp new production lines and realize expected manufacturing efficiencies; (x) unforeseen manufacturing equipment delays at the company’s fabrication facilities and panel factories; (xi) the company’s ability to utilize thinner wafers, reduce kerf loss and otherwise achieve anticipated improvements in polysilicon usage efficiency; (xii) production difficulties that could arise; (xiii) the success of the company’s ongoing research and development efforts; (xiv) the company’s ability to compete with other companies and competing technologies;
(xv) the potential renegotiation of or non-performance by parties to the company’s supply and customer contracts; (xvi) the price and availability of third-party cells and solar panels; (xvii) liquidated damages or customer refunds for late installations arising on large scale solar projects (xviii) unanticipated changes in the mix of balance of systems sales; and (xix) other risks described in the company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2008, and other filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date, and the company is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Measures
To supplement the consolidated financial results prepared under GAAP, SunPower uses non-GAAP measures which are adjusted from the most directly comparable GAAP results to exclude items related to stock-based compensation, amortization of intangible assets, impairment of acquisition-related intangibles, impairment of long-lived assets, fair value adjustments to deferred revenue, purchased in-process research and development expenses, write-off of unamortized debt issuance costs, and their related tax effects. Management does not consider these charges in evaluating the core operational activities of SunPower. Management uses these non-GAAP measures internally to make strategic decisions, forecast future results and evaluate SunPower’s current performance. Most analysts covering SunPower use the non-GAAP measures as well. Given management’s use of these non-GAAP measures, SunPower believes these measures are important to investors in understanding SunPower’s current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in SunPower’s core business across different time periods. These non-GAAP measures are not in accordance with or an alternative for GAAP financial data and may be different from non-GAAP measures used by other companies.
Fiscal Periods
SunPower operates on a fiscal calendar comprised of four thirteen-week quarters that end at midnight Pacific Time on the Sunday nearest the calendar quarter-end.
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SunPower is a registered trademark of SunPower Corp. Cypress is a registered trademark of Cypress Semiconductor Corp. All other trademarks are the property of their respective owners.
