MAXN - Earnings call transcript Q4 2021 | Maxeon Solar Technologies, Ltd.

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Operator

Good day, ladies and gentlemen, and welcome to the Maxeon Solar Technologies Fourth Quarter 2021 Earnings Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host for today, Mr. Solar Maxeon of Lahey Technologies. Robert begin. Sir, you may

Robert Lahey

Officer, welcome Thank quarter fourth are Aschenbrenner. Executive Chief and Officer, Chief With you, Good day, Chief Financial Waters; Jeff operator. to Officer, Strohbecke; XXXX Peter today and Strategy Maxeon's us everyone, Kai earnings call. conference

over cover me call housekeeping I turn items Let Jeff. before few the a to

a a replay Maxeon's available the on today page reminder, of of be As Investor website. later this call Relations will

we a GAAP Please are Please call Relations risks non-GAAP as press let Presentations various regarding uncertainties During statements. measures slide Jeff presentation SEC supplemental that those press on website, XX-F we Also, as are non-GAAP well both will today's certain the see the website. supplemental on deck these our which of to page described information call, Relations forward-looking of today's for the that for release, and To affect those relevant will most statements in to additional call, refer Investor slide With are reference forward-looking the call. available factors comparable of make earnings enhance subject of reconciliations. today's Waters. release, measure that over today's the to Investor posted as Maxeon's other as me during we the Maxeon's of turn GAAP and slide safe harbor that, well Events Maxeon's directly a to appendix documents CEO, deck and presentation, filings. may today's this also have the

Jeff Waters

covering and transformation Maxeon with challenged giving lead rose in chain and guidance and and map. executed quarter new recent to plan our performance prolonged by on bottom of team times price our hit chain upgrade completed Q&A. and I'll the supply maintain shipments. We face pressure, headwinds, review We're line of upgrading and continued to full conclude complete quarter, and occasion. they lines supply strategic logistics our outlook, and spite extended road road Omicron, map X volume from and milestones In to the our in to accomplishments. and overview now we Last conversion made X our Thank fourth our teams to good then plan you, Rob, Maxeon with and X everyone. business line financial X Maxeon start day, Kai key challenges by we'll will the Maxeon to the our from midyear. top also first transformation a

business, but up DG running, performance our incremental we Our and first orders team posted another European of over February. the our production and mono are and XX% programs and is capacity Mexico Malaysia Asia reinforces Malaysia, in we XXX with In broadly module megawatts And Omicron's challenge expiration. Ukraine employee transformation our million new as represent on announced in priority, mitigate is line recently XX% and Modco Mexico. for war our from a commenced highest PERC the chain reset as said, yet remaining more belief mass our just including an prepayments. contract products and the nearly surprise Customer which high, an and month vaccination by of in cell legacy very supply largest growth $XX But accelerated to sales of in the With strong safety. we ESG by we transformed levels, than has four The also with disrupted but a milestones. process. Maxeon are contract, in XX% this employee achieving rates for in Industry-wide pricing December, U.S. approaches our address presence our mix are not last culminated enhanced demand foundation world our I'll to in start headwinds, current schedule tailwinds finally, unwelcome ability polysilicon our In AC negotiations in market. global supply resolve Maxeon and the our only our lines XX% late to demand this of record over transformation of place, spread complete SunPower that discussing value quickly trade, for ability recent market macro while in in helped the more new Americas, Philippines transformation health in quarter the impact and the and the of to took that markets. at vaccination execute and with creating

Before program we for increased aggressive initiatives quarantine resources. capacity supplemented Omicron vaccination the with testing an impacted Philippines, and hotel

a also material have the our production ship quarter. impact quarter far prevented virus seen system material of designed we any helped employees in in fourth the contain the and We uptick XXXX, in first sophisticated in Malaysia Thus with that facilities. cases a our

chain pandemic. has continue year the last shielded decidedly We from been safety supply also a similar not for being impact developed Ukraine solar global fourth and to Omicron we priority. war highest environment highly these The in disruptions with are extended we broader on executing costs the times. the actions our chain our had the employee industry supply and experience quarter, facilities in delivery elevated what to with and ongoing COVID-XX

introduction in density a the packing we which is unchanged execute redesigned is of which X system, XX% and going X, last Our influence the any mitigate packaging quarter, Maxeon example exposure long-term compared combined improved ability of shipments more with reduce than our to and same by will earlier One XXXX. costs forward. on Maxeon approach to the our transformation to have from the identify situation initiatives,

a and than newly in in our we're companies customers in also to Malaysia the North taking to which than most pricing. IBC In least more weeks at product partners fewer U.S. weeks four to also to with took on shipping compared We now shipping Asia solar On line one less level, molecule customers better contracts reliance concentrating more Mexico, Asia, Mexico can from XX can performance to truck compared ship two tactical delivery. Asia. lines to renegotiating and partners on secure America, for ramped ramped previous via in our in XX capacity volume weeks deliver days product more water

a normalizes. the seeing that don't spot we're for us this have stronger sight term will which any will the to challenging in make with summary, us and increases. a And of the the mitigate we material In position chain year, results company. near progress are glass mitigate current bringing of line of supply impact prices Maxeon the aluminum commodity pleased increased addressing we're raw and we this additional suppliers, Although for environment environment to relief success by price on when costs help help portion

strategy: Now a XXXX, vintage Maxeon X technology. first, three panel let the on beginning of of our leading pillars the spend XX% me growth innovation. was approximately of our At few IBC XXXX minutes capacity

competing further margin more our capacity gross midyear. critical to project Maxeon This megawatts X by refresh capacity, We'll performed convert than we an vast majority of of margin X additional for XXX when it X is see upgrade. to than new of upside over points part than the turnaround, providing While megawatts margin improvement Maxeon XXXX our XXXX in this better time of this which midyear megawatts the will an a Maxeon increase complete. technology cell XXX product closed approximately XX technologies, We of X. as more for was Maxeon XXX with by is

treat versus superiority additional both lightly an our and decision As customers technology, IBC we terms our sacrosanct our Maxeon evidence and regarding competition. was This our key module taken recently differentiator to XX our warranty as of as the warranty a years. increased unprecedented not industry-leading

have and third-party failure back of embedded This extrapolate warranty to performance proprietary our predicted high standards years, shipped longer-term physics of data comprehensive coverage. met we models degradation over correlate to claims access XXXX, increased and degradation studies our actual historical rates. ultimately field on Fortunately, since products dating experts for warranty this by rigorous field XX with measurement

We especially our a from are and extended offer the positive are customers, be customers and to strongly to end of seeing in thrilled the to installers in response residential segment. mind peace position

among cells, Fab modules highest we're track The Maxeon to X. technicians X quarter. on next first produce line our solar produce words consistently ever they as and pilot few our a on increasing and engineers excitement Now efficiency IBC is our

and recently announced our We X distance product from competition our the with power performance warranty. further pricing our in conjunction expect enhance will that four-year Maxeon in particularly market, the

development options we're to progresses, and X fund As Maxeon the review continuing the line production to time ramp.

in with on BOM a options line outpacing in particularly of restrictions contracts chain component U.S. Since million. of demand panels customer investigating our task last we full far price Now scale our megawatts our include shipments production as utility manufacturing of of Mexico April. focused over shipments delays through traction. United the operations $XX project quarter the we These considering COVID-related over product team to are expand headwind represent are shingled collars the with revenue let's the Coincident focused or but the our supply our over of to XXXX, our our are bringing initial our scale beyond experiencing where prepayments events and call, are current the legislative significant hand, February over these With teams of on sales supply to our next and contracted bifacial U.S.-focused on contracts X to highly backlog our for in for market for increased utility-scale demand orders, capacity bifacial speed costs. We XXX a to we gigawatts. this our executed travel executed shipment inbound a either India. modules the portion States, U.S., mass Mexico two supply, the product. customers months. the final X.X gigawatts, on few move ramp, we in first our performance meaningful Outside contribution strength earnings of recorded for our in and utility at started fourth we depending ramping scheduled provided strategy to

of we world However, rest our power selective remain plant business. on

time and first last half first region Group quarter our in combination Europe of shipments is in Now for to year. in The our channel. fast year volumes. to the quarter We the DG point first almost of record differentiated XXXX closed same to And are very of at quarter XXXX. the the in start the where EMEA date with a megawatt were backlog double at off another we DG this

including are differentiated expect European and due from demand with This a a continued truly business is regions, lower-margin similar for are reallocating of Austria Other and strong France, U.K. value our proposition in later debottlenecking of initial in trajectories, the pursuing on and tactics growth Scandinavia, launched direct-to-installer Italy, Customer to XXXX, married This platform some factories feedback in in XXXX. a volume total Australia in of combination that the achievement saw We product supply Netherlands, the regions. been actively the launch our and the which the motivator which been sales allowed and AC in particularly The sales a our a channel us year in for has beginning cultivated the for our quarter the XX% from product channel zero storage supports decidedly fourth integrated more factory plans expansion, success Europe has to positive of in of module of model Americas. at and is ramp Australia over decade. to model than geographic XXXX. channel strong continuing robust to

several on exciting United and America, now direct States. in the initiatives presence Latin our increasingly in have growing we We progressing are focused

a of with expertise key opportunity as number very U.S., competitor exits the sales, directly increasing large to in products. whole, and when and local expansion U.S. our products such significant market-leading to demand U.S. be margin product a deep who to more by the our due channel as engaged no our adoption, sells in look strong volume market. at the SunPower leveraging the had California particularly Northeast EV U.S. historically we're With installers for success see we in we for and to market across DG high-efficiency markets While solar access great excited

the residential this contract supply including next revised us with DG channel, year commercial provides SunPower year. with to launch U.S. with opportunity Our and starting our own

core these the multiyear have And XXXX. lot a including complete model of together With our in to plan targets. initiatives Beyond Panel module call I the target new to to beyond over the progress in exciting review our initiatives, to our transformation XXXX. financial our Kai the continue all us propel to performance. of you we financial forward sharing of business We launching to achieve in coming We with look we're that, that will execute as We turn to XXXX. have potential

Kai Strohbecke

Thank you, hello, and Jeff, everyone.

megawatts, current the turn India. Let's XXX quarter. European provide performance Fourth shipments the financial and our of above the DG I final of guidance discuss XXX the project to XXX-megawatt to on details Ayana volumes drivers were deliveries quarter results. our for last will and for and XXX guidance then megawatts, record range quarter's in

guidance our Gross and slightly fourth We are shipping industry. above X.X% this of inside $XXX which X.X% of global million. especially that sales was range the $XXX for or headwinds loss of impact with by manufacturing. given $X $XXX the is of polysilicon Revenue line $XX million, guidance was with related million. to pleased sales at chains was third in fourth consumed of posed performance guidance revenue the volumes. range. for supply the at with to quarter our million million revenue sales million $XXX a remainder to And the polysilicon lower Included cost attributable the quarter in or Out to million. goods Total range towards million of out-of-market XXXX $XX of midpoint to impacted by our quarter in our contract, polysilicon of DG was was sold American million cell in million North going million $XX $XX sequentially came the our ancillary $XX our $XX

this an quarter, be worth potential any our the through was and for polysilicon already. of underutilization prices for transformation to Maxeon As without effect to performance contract $X.X the purchased we end X internal inflationary driven line. XXXX, of about clauses, at our our ramping price $XX million giving the contracted end impacted $XXX update, escalation of Gross which of stood that initiatives fourth in the in by were estimated at at mainly prepayments by margin charges million also capacity obligations

backlog materials the to supply As facilities XX% our standards. of some enjoy earnings based the fourth an chain contractually In than historical at utilization equivalent on Supply fully in quarter. team costs, estimated customers. in scale you and our from these on raw same compared revenue. quarter, passed can our logistics last presentation, meaningful remained X, to rate higher million see run on we highly The Once Slide bookings expect quarter supplementary are possible. costs utility $XX fourth progress were we ramped, including elevated costs near-full made and fourth DG the levels during year, of sales were chain quarter to

secured with in extraordinary Non-GAAP operating in our efforts these developments by line thanks a but our consistent challenge generally of our All teams, were we guidance million, with to $XX manage, projections. to range. came at outcomes expenses

was reminder, compensation. within for a million. operating GAAP $XX million of expenses adjust non-GAAP As $XX for to operating GAAP range our fourth our EBITDA Adjusted expenses restructuring $XX million charges quarter loss noncash stock-based venture. guidance sequential XXXX. million the in negative third decline $X large was attributable of negative and net $XX was to quarter related to the charges A of compared million million the in part impairment of joint HSPV to $XX our equipment

Moving to on balance our sheet.

year, prepayments down of the million earnings balance represents quarter We at and management $XX share CapEx contractual only first of in million prepayment previous to the healthy end austerity in at Ayana quarter significant due focus the a working down XX due connection is $XXX that amount capital of that to TotalEnergies XX completed quarter. due end third the project the million our capital continued the that payments. cash, on of further we This the restricted for quarter $XX our from $XXX expenditures the million. of utility pleased on disciplined are operating expense, are XXXX, we fourth the from for U.S. a below for measures, but lower days in prior previous project our days to quarter scale announced from amounted the $XX timing guidance went to million focus from to able XXXX for DIO XXXX for spend. have million, end to of half quarter lion's during Inventories despite cash deliveries $XXX $XX were with year. the of the range as of strong EBITDA. and the project, this million third call. the management million, the cash and our than mainly cash at the in million end slightly year the project. $XXX in prepayment expected We optimum and the $XXX Fourth negative million expenditures with to closed to a totaled of of guidance of maintain were at That Total of cash $XXX

line speed performance into Our efficiency continues to X capital the Maxeon getting America stress philosophy North of for maximum sacrificing and new X Maxeon without market. CapEx

to turn few the first We front the as of for quarter of with us XXXX a of like execution I'd still but final polysilicon a to to our transformation we sight transformed legacy have Now in line outlook as of our started quarters contract. clear attention Maxeon, everyone's XXXX. year a of well

focus a supplemental and range disciplined management of our megawatts our detailed please the us, and of ranges of of see are mind, megawatts. follows: to project The due efficient in of behind XXX ramps. performance guidance mainly our than to unchanged previous Our is in cash utility the majority our We projects. lumpiness XXX as is Maxeon breakdown quarters. XX% our earnings in a from that the X shipments line With sequential this slides. forecast also of scale guidance quarter execution narrower QX, is hyper decline Since represents guidance midpoint some in the

typical second the QX to in quarter decline DG project final included are gigawatt quarter the shipments for to mainly not markets, seasonality. Gemini, forecasted and due sequentially X approximately shipments certain fourth of our project, major also to next until the volumes Ayana in our Specifically, start XXXX will XXXX.

to Non-GAAP in to $XXX This by is using volumes, the from of European calculated Blended expected $X.XX the quarter DG-specific to revenue is seasonal the attributable grow in DG also supply million. approximately contract. DG includes of revenue is range being loss as the midpoint gross of of to business and in million by the expected new to midpoint $X flat America. with factories forecasted range, per shipments. March sequentially million $XXX other high per to of but increase the of more core ASP be XXXX deliveries underutilization and quarter Mexico to commenced $XX watt pricing product to year by projected million. At is first SunPower offset be a increases a fourth to driven a in in combined this charges at mix and costs some FERC due $X.XX including mix in and this remain Malaysia ASPs are part production. strong favorable and our regions, demand quarter our markets the North demand volume strong guidance increase higher in is supply offset watt soft governed First chain

in adjusted of will losses Note representative related the out-of-market million to charges operating be HSPV, of Maxeon's to operational be expected unconsolidated our legacy in EBITDA, excluding item. or more is is $XX This included way, expenses the range which to $XX performance. or Non-GAAP XXXX, are from expect $XX expected EBITDA of in for We million. we $XX which our to are range minus $X million, EBITDA gross loss. $XX non-GAAP to that report polysilicon of million starting guidance income the noncash contract Adjusted is a and equity our million, negative plus adjusted million.

first that quarter expenditures down are for underway quarter, reflecting to currently the large to range in million Our previous projects be completion. reality of transformation million our are $XX nearing $XX million the $XX from the and capital the in expected

Malaysia million our module primarily of expecting into overall cell some and expenditures of indicated CapEx CapEx For does capacity X Also, gigawatts XXXX. what capital CapEx CapEx. the line million plus from corporate please to for we that range the mainly of not include ramp-up capacity XXXX conversion are XXXX, That and we Maxeon compared complete time, the in to finish to of Maxeon last to higher and year Fab X.X at of performance Philippines. the payments the shift $XX the to X $XX any cell in is the IBC number R&D note number in this slightly due to production some

this be range the million. than quarter, to XXXX. ramp remainder in mentioned in this in Less CapEx is XXXX may $XX million half with As last of expected require $XX spent the of to

CapEx new available continue spend We to We high projection to footprint. with current opportunities and funding other expenditures or are the CapEx not our ensure U.S. our priority we North as to included laser capital moving forward options timing required American initiatives. the remain as well us. able exact this evaluate Also to high and expanded are to growth for in focused a fund on manufacturing liquidity support ROI

well one addition elevated challenge of In the the which as need lengthening been chains the capital supply stock to levels increased product will working transit and Company. as freight, to lead cost increasing to of the and has buffer and and new materials fuel our a due chains, for in growth remain levels to of likely supply material of

Ukraine have of the time, skyrocketing. energy, and clean put and has to logistics disruption sustainable for from levels At tragic like, structural The to more global in to in have example, customers many place and unprecedented We potential in for solar tactical have new from continuing and sent evaluate customers. our commodity prepayments brought initiatives and energy looked headwinds. never are trade panels attractive these about events securing compensate many same and cost

like our to polysilicon I'll to back behind that, ago us. With of and Jeff complete turn the before started our we product Q&A. emerged and company it years from summarize that contracts to out-of-market call the transformation go we overhaul with agreement with an take-or-pay portfolio, X.X technology determined legacy over and to are We

Jeff Waters

supply that the situation this in our the now halfway In challenge on has transformation. to hit heightened the chain increased headwinds the continued war is Kai. well you, navigating we Thank transformation, of intensity are financial of past track financial current with I we are Ukraine targets, summary, of believe recent point in focus. Maxeon Because long-term the and and

Maxeon's We expertise technology, are and combination success. will that channel drive than winning that more are values ESG long-term ever a convinced

let's to please Operator, Now proceed. Q&A session. go the

Operator

[Operator line of comes Instructions] Bank question first Our Julien Dumoulin the from America. with of

open. Your is line

Unidentified Analyst

for on Alex Julien. It's

one off. for that what geography I I to a be a when me expansion, kick I think standpoint, expansion? would Mexico, to quick mean you guess, what the then the or or you incentives get? whether I are be around capacity Just whether timing able looking sort mean, in on policies about from, guess, U.S. there, of that you might And

Jeff Waters

Alex. you, thank Well,

localized So when our that getting driving we think think strategy. of things about are to little more I the one manufacturing order, expansion, a bit the we in

So we our that's look market U.S. when approach. at

Our days, similar important where first are costs you're with our Modco in our being we of thing freight And especially a support that, is with these that ramped seeing how Asian move Asia they kind be. foray customers. just Mexicali. was can shows it there as to this up And you the

look As said, we think going really policies. feel with we're both -- a serve more the continually got good markets. as U.S. to to serve position you look a at looking be around broadly mean on and in and I term, We monitoring great Europe and is growing on what's a and Asia various And trade now. We've specific also longer out. infrastructure, We'll

dictate look we'll new markets quickly. to and themselves in as And new opportunities to respond policies very continue prevail trade are a growth-oriented that, We as company.

Julien Dumoulin-Smith

I here. can. Julian just I to it's in Sorry, wanted chime if

the it you Sorry the how commentary. backdrop acceleration, about can I just in accelerating space about But think I capabilities of your and I right, comments about the even there. the you of a for just what balance about the kind the perceive opportunity opportunity EU emerging time? you addressed this kind the about seeing have earlier. year same of can how peers the to as against know phenomenon here and think rightsizing mean, clarify little kind of in you're do in obviously, competitive And just of expanded records set, you If there, part the opportunity there? bit define sort you And raises that some of in Europe? yourselves, more lean address manufacturing almost some your ultimately, proactively capital against in do at your you

Jeff Waters

Sure.

It's a think to about about through foremost, local think us channel direct we direct that pervasive, very dealer very partners there. we the deep, to when very dealer unique gives approach and go I customers. that have think we Europe, go

in we've a allows previous us we've to here to there like not with move foundation a talked Panel, great the also at panels Beyond storage sell adding as So moving to our in forward got near but premium, that only the calls, about things the microinverters future.

look already there. grow, we like great Europe at we've as we got feel So a foundation

served Mexico to Malaysia. One of Europe was the moves capacity that that we made, at least initially, to move Modco our from

serve between always to the There's balance them of feel then So good be enough a now, it to about as coming, that. us of are here factories the where closer. raw close we close one but a to your bit Right get somewhat they well. also have does materials markets

it future, to a in always to quick us for take our capacity in any of for make putting if look be look at adding products. move much more at as to Europe, we we as whether were at think markets, it manufacturing the and that capacity to, looking production deliberate in or Series even Performance needed IBC quickly would sense the I Modco we would as for

we're and they there. in over that's calls in really right we've good the the date, again, reflected Xx been footprint with to we we got we're Europe decade. in where the that seeing from, a benefiting the And up growth built So just as for the all the that growth last Europe that last just excitement now, bookings seeing you're were year have

Kai Strohbecke

on can I if expand the one So things. of

Julien Dumoulin-Smith

go Sorry, ahead.

Kai Strohbecke

expand to about of on wanted Series just said one just I the Jeff Julien, things Sorry, Performance the capacity.

So as to over is to in our six. you very we've make been IBC, busy know, capacities Europe, successful which convert on

in really, modules performance as joint good which get capacity to where those taking terms also is quickly markets. headroom unique really very we Of the and that HSPV have in additional demand. course, venture we have a have strong But that show option panels our are from we markets off-take position and whatever those currently place as we that there, trying we're possible of into maximize in also in

channel terms in it. light our that's capital ramp model there, of a can always need up as we So we that

Operator

Our next James. of Pavel from question line comes with Raymond the

Your line is open.

Pavel Molchanov

Germany the in basically countries, Germany? there with any the energy this I'm political everything noticeable noticeable Let a in rhetoric? quotes, lot call last as the curious frontline just east been the been to if also the kind war, transition Europe. per weeks accelerate to from volume, of have particularly there of the to start me push sales Has of four and during

Jeff Waters

has so quarter-on-quarter Thanks, to see I continue I in little traditional Yes. would a our almost cases, seen. defying say Europe demand just that growth DG. bit we've mean Pavel. quarter-on-quarter, in some been strong the we seasonality

go we've course to it's already would a an seen. weeks, for bookings have although it's just not adder the growth I us, the four over that step last function say strong Peter, the of Peter been will like ahead. So of Sure. increase. more

Peter Aschenbrenner

Yes, Pavel.

out -- question that political a we're ways of hasn't in normally response, while on see think, move I said, interest to and completely. no season it part discussion figuring what would So as increased demand seeing I feel yet the jelled more interest, I that would customers there's of say anyway. and this from like of end there's lot quickly. top Jeff at we the broader

weeks I for evolve sure, strong. think and months, we'll see next that over interest expect to And so continue to customer but the is,

Pavel Molchanov

in China, I XXXX, domestically In the for capacity, mentioned think ago remember that strong domestic pricing joint in very venture market up? latest an the going a and so I Okay. we helpful. -- even you export was year sum in that That's Can had Chinese get the everything sales. no was

Jeff Waters

essentially We're still same seeing the dynamic.

to China the you more chain response As it you much elevated chain from supply see supply than see happens costs, overseas. quickly increases cost

But pipeline we of did And do opportunities although -- long do a are one to look lag India. more continue would persists. expect until term, we at supply here big that and continue in had see after within about long this least we towards look past for say, go the that deal get chain So China. would overseas, to for now that still near we to have we risks We'll overseas those. a it speak for you we to I opportunities, the we're

Peter Aschenbrenner

what is be or I comment that about more to Peter the the would it that this specifically add was And I business. based -- I power large-scale your -- specifically plant, took to think

into from venture are amount is We And an using we you'll from the product from our of are DG of HSPV. that business DG a selling product we slides that as joint globally. significant -- see businesses the increasing posted fraction

Pavel Molchanov

Okay. plans hold still clarity on And on say the to manufacturing pending in that fair Washington, U.S. correct? lastly, build to footprint

Jeff Waters

to very strong. our pay still that's market a there but event loan doesn't, is and is differentiated comes bring our to appetite nature for We're little very guarantee U.S. In that. our correct. market, still product on comes and That of as We through, that well. say optimistic assuming in I hopeful I through pursuing in it the for it's product in as would a continue And we supplier. strong we also us looking on would at we although and we also for Mexicali. think bit is expansion in because option, a very as of we the willing that that especially our a important the for the SEMA are color still see engaged value expand company, to a are -- a add that demand are based who

Operator

Shen Our Partners. next ROTH Philip question Capital the of line with from comes

is open. line Your

Philip Shen

and 'XX talking recent wins sounds the I Jeff, contract all it expansion sold out And your done, prepayments. 'XX. be Mexicali. we've And just you were on think you and might about checks some like on of the Congrats in based in

benefits premium cuts, from And at the I you if if Mexico. think was customers? that, I wondering more I you might have So clear you're Do other And be bit wondering to do the cost pricing a was you of share comment there a a and suppliers? Southeast are Asia there pricing then to it's you on mean, standpoint, Or freight of advantages. at is can number discount? a you're from you the terms. much product of available for a able think pricing

wondering And was you're So why premium a I aren't charging for then if that? not, if you're you?

Jeff Waters

are fair Sure. that yes, we out for say XXXX to it's Thanks, Phil. essentially sold And not completely but XXXX. in

market. from who that We help from we up And say in again, we're are factory a projections the to the and From been we -- business. our must product are a a to sit that where lot the margin doing comes as what perspective, with of already of in I'd from beginning company, we've in from technology for really a to What XXXX. part of certainly we seeing out take orders Mexicali. premium also pricing our kind shore get

to The secure business first healthy is at pricing. very

are trying we booking working we applying those We're potential on to where parts that still and some a when business help some help in cost, the the So tie them we the at bigger and look out we and risk materials we us the to where put so around 'XX. chain, into suppliers even see lock also, can, for bill have on of we're supply 'XX for costs back key when market get good market or in with indices. minimum controls some of of we

us that is of I thing future So, we on it has in And the kind capacity. the adding that feel of about like good part the business. more said, bullish

Philip Shen

'XX would could sold and you else to for out you I see What mean get need that of the already Yes. around 'XX. timing What to be? confidence that?

about kind -- you there? what much And of could so how are more And expansion be? just

Jeff Waters

cusp, maybe think four of next the what's I with on like on understanding here two SEMA. feel within really Well, going to the we months we're

extent, an for really semi hard basically a guarantee. and So we're to the looking loan SEMA. preparing us for pass get to through at We're going -- at and

site already final selection for down are plants. We into

light building SEMA, into dictate move would some how strongly quickly considering or that, that around gearing would be the would we whether if be U.S. think green a Mexicali. get clarity in for we we about happen, we say would once once SEMA So up on it we that we're so get then us expansion, that doesn't U.S. I'd factory.

Philip Shen

Right.

U.S. So what basically, on is with and the the bill. Mexicali Is expansion predicated of that happens fair? SEMA

Jeff Waters

out would is important competitive. fair. especially for scale a think scale. in And right build -- we're think about cost cost of to is I be space I utility you one it, that to company we've important It's It the learned it's -- really too, for the the as and go things that to

So facilities. we're look facilities gigawatt about talking are megawatts capacity. not small we multiple of at hundreds the These adding when

then appropriate. hear what So wait yes, SEMA. fair pivot us from to say And move you'll as forward or we that see we'll until

Philip Shen

it. Got

QX? looks on As the may further $X.XX out contract? moved from new contract. of one QX? it it you of QX like from ASP in the QX have But pricing, $X.XX a uplift in to margins an sequential it from for we that's the SunPower increase in relates QX possibly watt the month guide. to in midpoint your see see Could Can only And up $X.XX in ASP margin break the SunPower benefit we based should

Jeff Waters

color, increase, ASP increase. is Kai, add and please like talking Yes. say that the first, blended you're do. Maybe to you'd if about then some about what ASP that I'd comments I'll a give

the detail was companies. I that, to more go both get that for utility seeing, I we scale and did our get scale though in pricing, very certainly, prices space, are into wouldn't want even demonstrably IBC really certainly, our as are around we DG agreement that higher than good I What our channels with pricing especially for the So that I utility SunPower, SunPower. the say, product on Performance would in to within is it would say any U.S. relates good what we think Series we

of did it premium us, the the And XXXX -- you address our it U.S. have our opportunity U.S. more in market with allow competitors great big And expansion in they when And U.S., the SunPower, think get good XXXX. the still think the we least gives in to when a the market last but for in rates there's also that address. renegotiation beginning space a for pricing XX% the as at us that out, there, you a of who us the about XXXX, of motivator for some to up player about quarters. in For dropped don't to market. being three us growth in see

on it we're ASPs really level. the that look certainly, excited have about at when also So, that. you And would impact positive at corporate a

Kai Strohbecke

is add this to just here, Phil, technically Kai. just So

more starting that factors So because giving should then that. have DG quarter of less quarter that we're general And include the March March there the you're includes also uplift. in we right, it's first contract bit second on that not but quarter mix see the the a specifics also, we other power first any going then it are of on general. full mentioned, and that, also new But impact -- numbers gives plant product quarter, in the from are and an Jeff in as true the

Philip Shen

share how what the are that pricing. the Okay. look as share you a roughly the like Jeff, premium you what on talked Can wondering about could I And facility, know mean, then but I Mexico was we does to are, -- I mean, there? look? there potentially? margins double-digit margins the percentage relates it if in you margins corporate margins Or you

Jeff Waters

to up, the way XX% greater range scaled better. about the about our we've achieving will how or talked we be target when see Well, business think corporate I on margins scaled that think margin we that business, that or that factory in our up,

up course scaling the factory. XXXX, are over we of Now

lot board. got a So of employees, operators you've on

producing at of so not scale-up You factory you're are working the full the capacity. through

their at especially So first costs few quarters. are in highest, the

not the that fits which is we that on us have, cost the day our bottom a with projections get X. vision us this seeing pricing the company. we're going with gross a XX% that everything the tell to is we're we that that will I lot But wish have still forward, plus and top as for XX% a line a margin business case. add So to to were going business that good

Philip Shen

one one. And last Great.

guys I mean case a the like that is not or into are might just everybody recall a the it looks there's decided on -- for anti-circumvention, implicated it are think As tomorrow. to gets you be in. how case be the taken DOC. are But by small to risk, I if hear that roped useful put two not should relates it guys chance it anti-circumvention you gets there's what I

So hear. wanted to guys, to but I'll -- helpful you back everybody turn to be it just for it would

Jeff Waters

don't comment that? why Peter, you on

Peter Aschenbrenner

difficult SunPower it's Phil, in We've and for there And over the spot we extremely anti-circumvention a decade. been request. think complaint we're an Malaysia in make Maxeon. to anti-circumvention Yes, not same around in the case named case a

we changed anywhere operations. our or gone So, haven't

in how that center let's So, say. to the goes, of think we're don't see we'll we target, but have the

Jeff Waters

markets. Yes. accused I has would the definitely of that no a competition. dumping very selling just add to us would or high one play at below premium We in that, ever I panels relative the markets to say

Philip Shen

Right.

case. be you the really shouldn't premium be the the and between That would to countrywide. case the So time you've a of there, been said, party length

sure to of And whatever out so decision Is final that, up you're would is this decision, carved DOC, guys if a it to DOC. be and on path that that ultimately, the the taken of course the does of right they the render by -- make you then by events? get the right

Peter Aschenbrenner

Yes.

expect a we'll again, see I -- how we'll major going that to goes. wait to have us of I not this have think forward. component investigation would to and be

Operator

Lee next Goldman comes of the from Brian question Our line with Sachs.

Your line is open.

Brian Lee

have timing? of Most where next the kind covered, been the process, start a one steps DOE housekeeping update to around just on guarantee. on mine in stands, an quick of of kind expectations provide Can us maybe that but you loan off any maybe

Peter Aschenbrenner

is this Peter. Brian, Yes.

negotiation the of and steps next are guarantee The diligence We detailed itself. are the process. in loan

be multiple process that We months. to expect

And so continuing to it. we're through work

Brian Lee

kind months get And to in multiple in enough. process? yes? terms expecting to next final the months multiple of or a Fair decision the no Yes here Okay. step -- of

Peter Aschenbrenner

of the and Multiple the the of loan the guarantee extension itself is or an process, a the agreement. of months loan signature which on the end before determination

Brian Lee

think a about TBD needs CapEx on Okay. Fair of you liquidity, But capacity guarantee, lot the topic. of thinking mentioned. loan thinking any working that for financing maybe updates budget strategy of here commentary you guys how is Anything then the sources based some else made, margins just about 'XX about as you there the some And as of you're around outside you loan prepayment just just a on you and here? robust. guarantee. SEMA the the capital not the provide standpoint? can as are what considering how Outside liquidity well is expansion And of enough. the you're know that I from

Peter Aschenbrenner

one? you don't why take Kai, that

Kai Strohbecke

we current we lot And We needed CapEx million in ended Brian. thank standpoint, balance CapEx in cash seen, you. our have as you a there I the been Thank the that the Yes. spent are of certainly, you, liquidity pleased about Yes, for XXXX. a pretty $XXX think with was year has at transformation. which from that already

seen So heavy to out, all this you CapEx as you of behind in $XX is point growth get that done million. there budget baseline the the $XX XXXX million in well But is that as to have Is have X. X is pretty initiatives lift other And moderate R&D. are in and we one, both pilot Philippines as really in line making control is the really us. really And the in Max mind our the most Max maybe that concrete really, good in progress,

the out put the options the other probably loan from I if DOE, there, any which of initiatives that general, to we of financing true yet footprint, year. to that is initiative. next a and for a same successful would there would come in in we we to decide have some guarantee course, And So we funding our large possibilities continue is we there growth for range out application say, is, with U.S. also see the that but the that that more variety on including the part assessing. particular And have

Brian Lee

one for Okay. And last Fair that. enough. me. Appreciate

heard what's have 'XX around and Jeff, aggressive are peers, effectively starting real bookings, things sold in able of Just we've the sounds to in margins strategy -- necessarily you've the and bit. renegotiating the of of X, and quite deliver existing the the XX near ones the to but aluminum cost has ones from term. like on you on like proactive. getting where Are a continued you you strategy actually up do the color, that? where ones did of seeing of moved some back and some out backlog pinch medium that pricing and 'XX, place I as you your have think contingencies kind XX, cost the next you I allocated going you environment just can be to better logistics, reported mitigate months been pricing in not appreciate costs escalate, more and Or on Are What on, and for But sort time, you're to the here? your do that you're today pricing? the here to some to

Jeff Waters

say Yes. there are Thank pricing, contracts if you, in that's where as true Brian. in I those our well have conversations, and is space -- would flexibility would and to DG scale. adjust utility as we there the

because nature you I of in kind there. it's typically think scale, flexibility end of within to of utility customer, the tough have the that as know,

the to try really addition so better. the pieces supply the in cost structure more to worked to lock pricing getting, done, very in premiums we've we've I that put we target good contracts significant some what say, on chain would So is of in price more really can and

input one a suppliers pricing -- if been way so ability other that collars I But more with factory we are you with the always significant us the input costs able having negotiated and up around perspective, customers company. that do freight contracts that a really some live give it in to to our to of to strategic at that we of it concerns closer costs like by is our a the freight you look the around we've up mitigate if and like there as work some come to have. say helps from Mexicali our even we where So and that by thing would is that costs at look just much are stand

Operator

line coming have Instructions] the of of We a question Julien Bank from follow-up America. [Operator with

line Your open. is

Julien Dumoulin-Smith

of you especially as of Sorry, opportunity of this just [Indiscernible] can year, sets over this leaning incremental capacity in into P-Series, to over you about into you next. thinking not clarify if of broadly kind to terms just just that really this. kind here, leveraging the need mind, are kind some don't alluded about How it were talk -- that if leading sold you talking out looks don't Are you here? but you about mind, being elaborate? here, the can time to earlier, maybe if world you of

Jeff Waters

think two in We it Sure. ways. about

First, have the with great joint to capacity that HSPV we've is the out of venture we lot there. a joint venture we with in have access got

a so flexibility capacity And I of grow, And begins a as as again, the So would take-or-pay. the JV, of to pricing demand up and we lot lot equilibrate for just opens grows market that to think opportunity there. us. say, it's continues the in not

good if isn't we have business get So ourselves in trouble. to there, don't

the is producing the HSPV pretty piece market. other much on side because U.S. serves China The except U.S. for everywhere in

of PERC our foray So, the for We our into a bunch of converting did this Malaysia the portion production. It to first good fab really things. is a -- U.S. just mono was over cell

cells. gave us a reliable good First, of non-China it supply

it a And filled costs. as that has up you to long that factory. is factory The just though, And that's that adds been other underutilized. positive, know,

Modco opened we benefit to for win the the twofold. then great Mexicali there. then us We again, a over was there So up in And our -- converted Performance Series.

a as can contentious we across say It imagine, in the and to aisle. a But to think was soon significant more that The got CIMA. Asia, we've first But It event good we was In capacity so and the at positive will, we again, with that, adder with we as in expansion that production. X that that just CIMA, us move will cost has lot about knowledgeable X.X take be do it a produce you a a need strategic that full freight States, bit roll that ready other do we've States, has lot there. To the we're to been that pieces. guarantee. capacity intention know, hear talked there We've to you of to Malaysia the that gigawatts module And now capacity. process add price Mexicali. a for good capacity now, actually it would as on as DOE the United we room increase in be the with Mexicali helps We with so with combination. as little Asia United of and gigawatt footprint to there's support. could that, thought and in a a of right really that CIMA. a loan that of grow hopeful variety in U.S. doesn't the customers got in we're on happen, do closure bundled our going allowed I the does really what we scale, opportunity space in over got are Europe company. bipartisan of And other what We nice a -- is, have to to if things a that we're we fundamentally, see to think before

up there would to another scale in And that Mexicali quickly. we already. up that scale So is pretty benefit we've there done look

going than time. So the now adding into of more hands first the do you group that were additional to experienced want they a Peter, is capacity much are add?

Peter Aschenbrenner

joint rest let and just demand. me of about one add venture the world Julien, thing the

to GXX GXX of on As new have based couple ago. using large years the DG increments a large TCS wafer that that's pioneered our the that process larger capacity of transitioning format. imagine, wafer format increments online capacity, in big been might those been really product the increments the offer of recently, -- capacity brought you We're there

capacity that's going the bigger unlock chunks for us future. market to in the available near into So deploy DG to of

Julien Dumoulin-Smith

of market respect talk the But with as meaningfully not it. rest ready Got to world, to JV, ability about to the said. you

Jeff Waters

the I'm could question? you Julien, sorry, repeat

Julien Dumoulin-Smith

Yes.

Just the kind expansion alluding just despite on the of sound to of into -- just of front. rest doesn't leading of demand, that of the on a the any were demand ago, utilization on you're the kind level It world yet. like quite to moment expectations as capacity you ready Peter, commit to

Peter Aschenbrenner

United -- in Yes, business it's especially dynamic. you know, they than very overseas as the are that's It's a And fair are utility leaner comment. States. the margins the scale

I that say much well. those volatility more the right better much we're a costs. see And and is continuing Series more course, would in with to growth buffer now, that as grow still sensitive panels of given that into our margin that market, given we Performance the of we're So JV, better, buffer there China it's to DG margin through there's deploying

Operator

this Thank participation. call. you today's your for conference gentlemen, and concludes Ladies

may disconnect. have Everyone, now a You day. wonderful

Maxeon Solar Technologies (MAXN) 25 Mar 222021 Q4 Earnings call transcript