Earnings call transcript Q2 2023

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Operator

Good day, ladies and gentlemen. Welcome to the Maxeon Solar Technologies Second Quarter 2023 Earnings Call. [Operator Instructions].

I would now like to turn the conference over to our host, Mr. Robert Lahey of Maxeon Solar Technologies. begin. may you Sir,

Robert Lahey

Good Earnings and Conference operator. Second to Quarter XXXX Call. day, you, welcome everyone, Maxeon's Thank

With us Officer, today Chief Financial are Chief Executive Kai and Officer, Strohbecke; Chief Strategy Peter Officer, Aschenbrenner. Bill Mulligan;

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

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

uncertainties today's safe will make the other subject regarding today's risks for affect and statements. may are harbor release, forward-looking to the these additional that in of that we that statements call, X-K described today's SEC presentation, see During press filings. information slide are those forward-looking factors various and those Please documents

and this Relations have To call, Presentations supplemental also of we slide Maxeon's website. a Investor the enhance posted page Events deck on

certain Maxeon's Relations Also, the deck supplemental our measures comparable release, both relevant are we appendix most well the call. non-GAAP of today's press GAAP GAAP during a slide the to directly measure Please reconciliations. as earnings Investor reference as which non-GAAP website on will for refer presentation of of as to as well today's available

that, Maxeon's CEO, over let call to me Mulligan. With Bill turn the

William Mulligan

ASPs solid in and the with exposure distributed generation was pressure second allowed delivered growth adjusted we X% U.S. midpoint. to revenue that utility-scale strong EBITDA sequentially us profit the our to and Thanks, guidance Maxeon largely by Rob. of above spite XX% price significant a growth This achieve increasing year-on-year. quarter driven our sector. gross maintained In market,

unfavorably impacted my detail and that shipment worsening remarks. demand I in in environment greater we in associated will rapidly quarter, and volume late However, DG experienced which cover the our later revenue. Kai a

pleased site, major not have certainly report New manufacturing forward Mexico, Last, least, we very as step a for but project. U.S. our this that I'm selected Albuquerque, to

with financial key utility-scale Kai performance and then review second accomplishments distributed update QX provide initiatives our year, our will QX the and for quarter now and I'll businesses. we'll generation an full and Q&A. conclude and of expectations in our then

above, We shipped over of has United quarter, Maxeon's our to the outside As annualized of primary Primergy's second utility-scale site become XX% This Gemini mentioned States. business the in included X.X customers of in volume which Las gigawatts growth Vegas. was driver.

our project us, first U.S. with an our Completing in independent plant higher in and largest focus a as backlog power contracted holder the new and further company for now Our can record this market gigawatt utility-scale we shift was into deal to X.X XXX-megawatt solar for ASPs. country. big the project the the delivering

Mexicali and ribbon We Baja, California. Modco senior in late also by celebrated our June achieving other Governor attended ceremony Ávila the from State a officials full government capacity of cutting with

expect this half to through Mexicali We the second year. ramp that of will up shipments continue

delivered quarters, nicely X and panel improvement, by output our past fit XXXX, is into With expanding teams table place, operations visibility prices the in around expansion. Over increasing factory average over by the our have continued this power and operating technology for contracted foundation Xx U.S. solid at offtake X%. and

and selected today extended other be I'm have will the and state very module for by site press for and strong welcoming a we that site governments. tomorrow today U.S. a Albuquerque and to and support cell we our we Governor interest disclosed We factory, near event. speaking local for you where dignitaries new the our grateful are from Grisham

Due that of the approximately completed XX% DOE New to site-specific selection X.X so plans of our are our NEPA scale have gigawatts. and they to of to are factory site are process moving We including Mexico pleased nameplate diligence and U.S. upsizing and sufficient a conduct at infrastructure of environmental demand availability we can customer the quickly forward capacity complete strong site option now site, studies, submit to by evaluating exhaustive the the anticipated to the a review.

to position and in design currently future customers in capacity be are Albuquerque near a with the factory. to of provide information discussions our regarding We final expect in more the definitive

uniquely reshoring a States. the be in solar to United a is supply Maxeon leader to positioned chain

Our product technology is world-class in and standards. in our including to record North the worldwide, our high reliable performance, strong delivery industry-leading ESG proven demand experience due And of appreciate stakeholders America. in deploying its value solar

highly forward exciting swiftly to are focused moving on this We project. realize

business. DG let's gears shift Now to the

demand both mentioned the Europe. drivers I in cause X.X rapid over the sell-through in QX. effect spread The in and have mostly in market and U.S., essentially and normally interest And power of it to industry-wide X.X such regions The as cost implementation the year change focused U.S. California top rates now of levels bill channel will were earlier, time environment As of or unexpectedly late savings. NEM the the the Texas higher been was that on and In this rush processes several X would in the of funnel. high demand low Southeast an take we on in primary of quarter residential the the of inventory sales experienced pulled change the quarters. first replenish NEM sales

the just take time value are end installer processes sales And the regain its our in testing quarter. professionals consequent led customer California of XXXX the X.X California tempered backlogs will fully reflect of outlook impact policy many off for The fundamental in this California We to volume the sales strength expect now but NEM over second time, the second have propositions. and half disruption. dealers in to market we

high limited. our softness residential, those since we from most the states long-term Texas with relatively impact roof in In prices, typically the and sales product We are quality in savings. utility active saw constraints on locations is in processes U.S. exposure Southeast in and based demand size aforementioned less installer

SunPower in line of supply majority were with to sales of DG the our were The U.S. and agreement. terms

in channel, our behind Maxeon-branded targets original above. mentioned which our factors is distribution sales showing In growth, addition own to now although dealer also volume SunPower, the promising doubling demand due roughly we to QX, installers to have from

market As a is reminder, currently of of by segments not the served this address SunPower. the purpose channel to

increased the have later start activity and dealer expect seeing year. sales this new hires the onboarding to We of this results and of rate

While disclosed, to been that of responding and noncompliance. with as notified noncompliance other both parties a thorough past pay failed with net Maxeon providing clause, noncompliance. the million invoices. the we has non-circumvention to the as such continue complied not positive SunPower provisions recently $XX to supply notified are believe a relationship have approximately SunPower, has conducting under certain SunPower the alleged has due information requested to it that maintain alleged master agreement we well investigation the have of cure which proactive writing, SunPower, steps as and by by taking in of

that contemplated parties claims. resolution to the contracts. we confident the is We of supply remain a and a of provisions SunPower resolve parties disputes and As that towards are agreement, engaged spirit have under work consistent the incentivized with such master beneficial these intend for swift dispute both both with current to of manner in the

Europe, the as different installers, created inventory to market. a access modules growing, we In the have segment product although abundance in fundamentally Having are quite team of challenging, commodity is Chinese top-of-mind of low-priced a reductions today the our sell conversations. bit Because sales is and market customer also theme the of the bubble a Maxeon. have sales significant that, is different dynamic still and the difficult overall more direct demand price environment in for Europe job is a said in

margins reductions. cuts made our on Europe. within ASP with above we line enabled the decreases, and percentage hit Even expected reduced prices ASPs range, Overall, with levels planned plans and In our in our our than held in differentiated QX, in were QX panels line DG and earlier absolute products IBC largely more XX% that by terms. business, QX our we in profitability price channels cost that gross we these were offset dollars both our DG and performance

associated second current into later. projects, mitigate U.S. sales To these explain in C&I in the and as the somewhat we C&I to will expect have QX and our half longer weighting shipments applications, sales cycles products focus to to with residential, in XXXX, slowdown Due both allocating towards we been Europe. increase of the the and Kai demand sales increased

next is our develop profit the strategy. steps along to continue this with our Maxeon-branded our include Key several this to channel selling strategy the revenue ramp U.S. and possible years and our in Maxeon solar and X, continuing journey competitive the in we Panel Beyond and such portfolio have We resilient business of as differentiated cycles have differentiated product built We XX as demand strategy be impact through the to in expanding contributions believe of our advantage extending a effective, channel from and experienced up our channel cycles. intend strategy to that products to

provides utility-scale our growth strongly In and opportunity is sound global DG platform risk. U.S. summary, that exposure we market that for while a long-term diversifying believe profitable of portfolio strategic

With turn to over that, I'll it Kai.

Kai Strohbecke

Bill. you, I last quarter the well as as details the provide drivers and full performance quarter's guidance discuss and updated current will Thank year. of the guidance for then for

for were DG changes in to short X% to up of quarter primarily European second and XXX sequentially rapid the mentioned shipments due the XXX unexpectedly U.S. megawatts, fell previously guidance our Total megawatts, of XX% XXX demand. We year-on-year. and

Maxeon-branded levels us of U.S. second also there guidance. growth our $X.XX. allowed ASPs We maintained in posted for our profit to margins. objectives below our DG ramp higher-than-planned new healthy million, our than lower channel, exceed our quarter was expected, volume in Revenues were $XXX ASP sequential In above the and but terms

executed midpoint. supply of reduction premium performance strong which team in environment polysilicon to sales market, to costs. we margin sequentially. to XX.X% price particularly both This on and above and the freight by held enabled driven which was million slightly chain $XX quarter continued Europe, to SKUs, or maintain second planned profit progress by and by favorable gross IBC revenues, Non-GAAP the In gross but ASPs, expand the team regards price our cost with guidance was our decreases line the was efforts operations us

$XX consistent second first million, minus $X Non-GAAP plus million in from $XX million the or with guidance our and quarter, the up in million. of $XX operating were expenses quarter

primarily million driven The was of in second attributable line income forward. to EBITDA a GAAP in negative $X.X to was million the of million. by $XX Adjusted revenue prepaid delta net quarter previous stockholders compared of adjustment and $XX guidance in our in X.X% or million the the $XX at our came from mark-to-market quarter. to $XX of million million valuation result $XX difference with the

as million investments Moving This capital closed increase raise on first million to was debt quarter of in end the short-term the equivalents, cash the second as quarter. compared of at the sheet. second cash $XXX May and our million capital by offset expenditures of and to well some $XX to cash, $XXX repayment. restricted balance We attributable quarter with partially

our million from quarter. which and U.S. half million line expenditures market. slowdown raise, for we for continued project began capital our demand IBC Inventories our Following of $XXX capacity during cell of more DG to our expanded $XXX next-generation than planned the ramp for the for technology, quarter, of performance and utility-scale module the reflecting the accounted the CapEx

current in quarter, demand the this to of trajectory a to and, persist residential to somewhat and margin. the to residential expect pressure market utility-scale, therefore, expect in of In on pricing demand see competitive higher fulfill. dynamics challenging we from In DG, continued expect still lower growth price remainder for And competitive have mix and challenging some XXXX business. we bookings volume our year we and pressure C&I the in hamper

sequential our of in for represents shipments demand million, softer due the XX% context $XXX XXX I'll consistent between decrease. a the quarter this quarter sequential $XXX full expected XXXX We residential the revenues third project XXX to to decline quarter and We to midpoint guidance now order. of this and of of third guidance project megawatts. roughly The turn With near-term million with volume third the mind, year.

of expectations, margin in will expected Non-GAAP consistent profile the gross be the million percentage low expected expect with $XX margins gross market This profit be double the previous margin lower challenging but also is digits. our QX reflecting conditions. we is QX by to that now in gross to range sequentially of affected million, our $XX

$X team. resulting between incremental in million. minus previous Non-GAAP in the expenses million or quarter increase marketing from U.S. mainly at and a the expected are be be plus midpoint, our $X DG EBITDA operating million to expected to investment million, sales and is from third Adjusted $XX quarter the $X million, $XX

in CapEx are Maxeon expenditures projected started our the X $XX million reflecting capital quarter second range investment, capital million, in of of quarter be to Third than higher a quarter full previous raise. we to the late which quarters, $XX following

of consistent be expect range adjusted million we our we XXXX, to $XXX May for in guidance, For total account to which Maxeon the to X. previous with million, $XXX CapEx in

this reminder, any manufacturing. CapEx guidance a for As U.S. excludes spending annual

our year full $X.XX EBITDA $X.XX XXXX, to $XXX million. to the guidance For billion we and to billion our revenue to are $XX updating adjusted guidance million

the turn Q&A. I'll before summarize we that, call back Bill With to go to to

William Mulligan

Thanks, Kai.

As unique have in am Maxeon earnings fully previous headwinds, global of solar panel current on manufacturing to and the the aggressive companies goal one industry technology I said Despite help profitable my to market. and leadership most make channels calls, extending this by operational excellence, focused I while still is leveraging our our objective. the cost reduction driving on industry

into at from In drive level. years, prospect selling financial XXXX, In module X And XXXX, entire utility-scale backlog firm year operation ramping expect have cell our expect a coming in improvement of the Albuquerque of excited X of to significant manufacturing an expect a contracted from factories. prices. in capacity. full our new new are over our benefit we we at see higher to that a Maxeon pipeline structural facilities, forward, about performance the and XXXX, we will we projects Looking capacity I contribution

for you Thank your support.

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

Operator

[Operator Instructions].

Julien from question with of first line Dumoulin-Smith America. Our of the Bank

William Mulligan

there? you are Julien,

Julien Dumoulin-Smith

DG-oriented maybe P-Series. mute about the new X pressures think on about Apologies. about wanted in where to you this just impacts your think markets? leaning And IBC talk evolving especially expansion? Max the how what's evolving bit how you ask confirm are are as another opportunities, landscape, you're thinking about Sorry, international there. And you how market you and end you here? going a adapting And I further guys the on the as pivot in you to the maybe expansion Europe think C&I little and to was if how just about I about production into. Can versus

William Mulligan

it Well, Yes. in Julien, Europe. Yes. has tough been

really I than expected, think deteriorated faster sector. these most industry inventory in primarily of levels high conditions in the there the by commodity us the driven

We are product, a a installers sell to not somewhat with sell different from proposition we're that to because with and but direct immune unique value isolated we it.

created some us. has for it So pressure

We're to a going in ways. of respond couple

First of within share there's grow many all, to just still market Europe standpoint. opportunities from a

Europe, Germany, and a we biggest have the small market very Europe in PV example, still in share. For

our just the full to on to -- grow down the sales doubling efforts we're bigger So and pie. marketing try

you really us. And C&I. good mentioned a is That for opportunity

for this high-performance within long We of following have of a products well. lot past been well. experience lot in there. have sector you where for a There a our specialty there is that opportunity time. a of sector those know are applications play And company that It's really who we sector

is applications building the integrated in even in our example, of For Carrefour, in resistance particularly TV in panels like U.S. things agricultural or here, valued. ammonia where

Europe are a bit in but is bit the of on a road this obviously of So do believe plateau. say, bump we still would we in we a very growing. into. here. do think market DG still bullish We haul, I have a other the is long But can markets a fundamentally, I pivot little It's

Kai Strohbecke

Julian, you also about is P-Series this Europe. And Since the specifically Kai. asked in

P-Series, costs in a a we So our price follow commodity on are as position the you index. know, where

also, And offtake an we from not of into So joint commodity right venture, but our have go basically that Europe. prices the panels follow an obligation.

forecast. we modulate in offtake with here can our So also, line the demand

Julien Dumoulin-Smith

super you've 'XX. could situation about And here? you SunPower bit -- Excellent. can also about in reopener? look, marks a 'XX, one you that but elaborate talk if over little how other And question got some conversation question here hand this I then arrangement, to conversation X little the the the tie a Can quickly bit and if on impact pivot there's the obviously, and can? those Just at will, the ahead, more you together, and if of

William Mulligan

Yes.

into symbiotic a They that know experience. how do remarks, prepared channel. high years a fundamentally have we believe many had great it deliver product at they've with mentioned relationship. high-quality their are that a is But in really And aligned. our well. we interests to SunPower. of level, my We we entered As a dispute do for It's

it's fast a interest in of thing possible. both the it's think parties this to mutually relationship, we be as to resolve So beneficial and going as

Julien Dumoulin-Smith

you're right. still No expecting All next conversations? But of year. some amount volumes change those

Kai Strohbecke

as contract stands it The is, Julian.

we So will continue it volumes expect that continue. the and will

Operator

Philip of Our Shen next from of the comes MKM. question line ROTH

Philip Shen

there. up SunPower follow the on thread to wanted Just

talked million allegations You as the $XX look guys. timing. collecting and resolution might well maybe has wanted I to understand SunPower path that against having like and the you're about what to you as then their

And so added think time? resolution? it's of so Or sustain to could think near-term receivables type balance, is the being additional during of And time? that that do period a are this some you over time, and do you for increasing

William Mulligan

Yes, Bill here. started. Yes, this thing has just

want will very go don't really plenty the relationship. to There's trajectory I once a of symbiotic, So beneficial is around. take. just value will mutually this speculate say, again, I to that on here

I think And speak certainly second be resolve it's parties that something maybe quickly. will you incentivized could that to Kai, to half both question. of the

Kai Strohbecke

SunPower are the that flow, Yes. contact say that on I with the of would topic. we on topic cash in

to monitor time, same and course, we've at to But We the with our them. got modulate are willing of exposure accordingly. work

is there. there So a -- path can come to but generally, that a I think we resolution

Philip Shen

it. Got

the there number? might an that of like a what exposure be way a the Is what on like level. be? base -- seems Is to million might there Okay. potential frame size cap $XX a

Kai Strohbecke

at really moment. not the No,

invoices other the sales publicly disclosed second just which that $XX is SunPower number were there. quarter. last out disclosed, have our quarter, give, number can total with million in we we overdue, $XX.X million There's that that. is more I the we the one than have obviously, So shipped have Maybe

an just So to reference give extra point.

Philip Shen

it. Got is collections that all just of And or question a in terms percentage? Okay. of in modest

Kai Strohbecke

we here, stating facts resolve and we SunPower are at in situation. that with said, as Well, to I the the are moment, discussion

I So what is can't what question, in about not. is comment

add, just going to resolution. think come our -- you seen a to from to have standpoint I balance. liquidity we're standpoint, From our our

think a there are I position to to degree. our we help So some in customers

Philip Shen

that that Shifting release at talked persist your could slowdown In you the QX. you're least through over about slowdown to experiencing.

speak could X And and for regions. needs And the 'XX? was through persist to happen what if share the around? be So slowdown Europe? from continents, do could turn you you wondering I the you maybe to order U.S. environment it it differences how So there and do think might then long lasts between in to key the and challenging -- think

William Mulligan

Yes.

Phil, you from expect stronger So say, can QX. than be would guidance, see to we I as our QX

quickly, to the be as is going there's say, not actually having that they oftentimes these as but of there. many before, would to So still correct due Part bullish through fairly long-term market. I been this can seasonality. of I'm some prospects unfortunately, quite of cycles recovery they deteriorate, fast on

think It's see NEM under It's recovery works. California. but X.X, value a new a think a strong in world the will I still very we I market. proposition still

You increasing economically make end for will It's storage rates. attach still sense going to see customers.

are take settle know I And I think time hopefully, I it's long-term bubble the fundamentals one going -- of just I off. the DG future, but out strong. hopefully inventory And think this be no -- the can then long-term for a to fundamentals bled so for predict the to mean, little to

Peter Aschenbrenner

Peter. is Phil, this

is growing issue make slowdown there be that inventory worked slowdown, to is an be Just market actual a note, clear, Europe. we The market don't to there to just in The needs off. nicely. see demand

Operator

Brian question Company. next from Our Sachs & is of Goldman Lee

Brian Lee

little around I SunPower just the to wanted on understand I following here. line dynamics. a bit the up just question guess of

this some there, are it obligations, restricting Or in XQ? treating obligate Kind of line SunPower the resolved? situation So given fulfill, Because situation prepared like your in expectations, volumes next situation not with terms near in you're they, reneging gets on translating of of getting came all what of in in how XQ, current quarters? I go of you term, sort shipments guess, kind XQ the here them of the this we into are remarks, near the in, the just given should what's the forward sounded what's term over to but couple contracts, until in in paid? of

Kai Strohbecke

Yes. Brian, it's Kai.

into so at really all, we go fresh. this the of So is conversations can't all here relatively details the

we to that have our are we the just contract we So be wanted answer leave and That ability we is reiterate I previous say that monitor with and think the to to modulate willing that also them. from course, here of I'll it honored. going helpful that I to there. be we, to And the that work expect have exposure

Brian Lee

of customer-specific some year, to there's guess I guidance with soft the coming normal challenges what of term? just the broader I'm this this and trying But relatively is you're in demand how of the guess of given with here in this But inventory much resolve this is market issue, broader sure maybe rebalancing Okay. read customer. part expectations the question the is that across I versus near versus versus here what seasonality albeit versus issues SunPower slowdown, market just ultimately underlying just some part the

William Mulligan

we're we're in part broader of back a and inventory the contracted The softness relationship are Yes. Europe. of shipments buildup guidance. I slowdown assuming get again, result on seeing the mean, our in we're is market to largely track going that SunPower the here

a these company and very so are times see strong the slowdown that's that that at utility-scale we where very And growing. diversified happy it's we to have a sector like we're in exposure DG and

in noted area company are prepared my remarks, we our the for forward. going -- we it's As growth

growing running. and to we're meantime, for here year. starts Mexicali about few also will we're Albuquerque, Malaysia, in this it super revenue project next years New In site. Mexico, fact, before contribute our meaningfully. our at excited existing a We're But be It getting new up in the

somewhat tend So cyclical. these be to markets

U.S. good in on currently So is slump, utility-scale we a which fire believe DG sector, is some strategy. of currently having diversification a a is the which bit and between market, the

Brian Lee

on final but pass it Maybe development and keep I and this, incremental it's like just a I'll harping on, to here. seems X hate pretty it Understood. ones,

want we're sure to make just the I page. same So all on

you're So would rest the of saying, have and this SunPower is been whatever of line to year your here to challenging kind question. status sounds having would if basically assuming are misinterpreting what recently. like it, with me I'm with over in prior Bill, expectations the That be the you it correct customer arisen the original first shipments

And the you some to Is second and forth down to the sort here question come of what's presumably, And need around to then just is, fair? compromise? price. that is it to back if all the potential guys going Is price? resolution come

William Mulligan

Yes.

think in largely the your I of terms correct. was volumes that contracted presumption

say what In can't dispute there's the was -- much there. than really about, in were breaches our remarks discussed terms that is mutual more prepared the of I

Kai Strohbecke

just is And guidance say, the minimum. the to contracted really

upside additional no -- anything So or volume. any

So the is in minimum that really the contract.

Operator

question Our Morgan from next of comes Percoco of Stanley. the Andrew line

Andrew Percoco

in the to to come Albuquerque. just facility manufacturing wanted back I

dependent incremental there the capacity? gigawatts think as or on you mean large X.X that that demand tenants through seeing. demand? is that on clearly that that incremental could I it's willing X Or sign to as anchor you might customers be So X are strong that very add, broad-based you're

pricing it And are capacity that dynamics you on maybe contracting domestic question and some prices? when the around topic. the different a slightly that How polysilicon content comes to about play of with the same out global thinking

William Mulligan

that, environment. the of Peter bit end talk a I'll first the let Yes. take pricing I'll Well, and little Great. about Okay.

chunks, the contract we think a developers right? this we're is less project. X customers utility-scale selling customers, When to, volume. when about to entire about XXX customer X gigawatts it, in just will you Our XX utility-scale for Primergy that great X than it's customer example, megawatts, think they right? think I big buy

this The market upscaling shovel-ready, also that that we large need strong really the is ramp the we will on have facility really outstanding fact here based all to and the found site this necessary facilities such just is really time place a that in in basically facility. for environment. And

position We're in able be be optimistic negotiations the gigawatts, in this in customers. like will infrastructure It to about to X but with the strong space, the least upscale to now. have be really to a So we're it. right land, utilities, be we'd at able environment market to

don't And to Peter, I ITC you mention or... if want know

Peter Aschenbrenner

philosophy. say for that our baseline in pricing structure fundamental We're any looking value at both the difference in supply, also there's pricing module terms Sure. local incremental that gigawatt X of cell the there includes for I'd terms of at supply, manufacturing, no but level. and the of

think we I that in a bonus. been them will the we've of And be expect that that to terms clear customers our ITC help getting big

keep And with indexing some -- multiyear protected value there's of offtake it that for so us. also that inputs margin involve would So would our inputs be to price time cost tenor. us for a over

William Mulligan

XXXX project, this we signed execute customers. will XXXX right when these about And we And have the with through way and talking into contracts. now, we're contracting all

Andrew Percoco

it. Got

to back of the coming the then And helpful. facility. That's size Okay.

substantial longer gigawatts max like capacity it's at to wondering could the upgrades? pretty there. available before substation have the what's we How land facility thinking need go rework sounds easy you you be extra you much term land based or add it higher Just can specifically? So that it about the to doing around X.X this that on to start

William Mulligan

out a runs out over I'm field miles X looking for mountains there. that flat to about with the nothing

that bigger have if parcels have here. space So all give lot even we go actually, we optionality to. options us And -- on we seriousness, adjacent in want will to a of the components chain closer is to the the And localization think of likely of is. end to the perhaps, that's U.S. demand things of in happen the one where more supply -- I

well So I think as that's over probable a time. outcome

Operator

Price of line of the from Raymond comes question next Graham James. Our

Graham Price

guess prior I up following just on question. the

DOE to project in we kind up expansion the loan scale like XX% well? end ballpark? an And of LTV, would upsizing if do about you If X.X is that gigawatts, the something think the as

Peter Aschenbrenner

that expect typically done loan with facility. the value, be would et are some around not cetera, the the of The but loan the We to size Obviously, of ratio, to Peter. should there financial DOE metrics, that's deal constraints scale would This which expectation. a is scale. yet, our total debt coverage

With to What a the a mentioned respect of that be -- the together with we coverage prepayments cost we've -- cover we that that customer total a would of costs, the to haven't to to majority the specifically. project or said would disclosed to be of project is loan and expense majority. project the large majority total of expect the

Graham Price

the gigawatt, previously, it. Got XQ between for maybe helpful. full just And year? able my but bit. come I follow-up, X IBC down versus That's that's a obviously, on shingled you quickly know breakout to was for provide the are Okay. the and about IBC expected guidance,

Kai Strohbecke

Typically, Graham. do not for a basis capacity a we gigawatt No, guidance our internal The or shipment provide that is X No. breakdown. the IBC. revenue on

Operator

Next from Kevin Pollard Partners. line question the of comes Energy Pickering of

Kevin Pollard

I utility-scale Mexico. wanted to margin gross with to longer and U.S. I -- for in talked a little about kind this in mid-teens think the just we've what bit with the from stay you past bringing were targeted of expansion in the low

costs, the think As a about totality those reasonable account $X.XX U.S. the margin expansion higher credit U.S. is value-add of but and pricing, also of you expectation what in the ITC for the the taking into facilities?

Kai Strohbecke

Kevin, it's Kai.

and modules United United the to -- incentives of States the the terms bit the an Asian-made put to just pieces IRA of return-wise. about that of difference and incentive in kind and of the not to the SEMA how we already pretty build same and getting a little in made you also so-called in meant States margin. incentives well bridge margin make the think provide cost up under are are here Southeast it think The about in between I kind modules

to is we is also for the additional And then, benefit provide to on that the an eligible there course, top of products, credit which be here. of expect going that, with ITC

actually in that this long-term much model financial margins So to commented of XX% us business. above overall, on. expect be How for XX%? we above the part haven't the We really

do I think that to on but now premature comment it's it's we this a marker. a them right that pretty -- expect bit be above to call, on

Kevin Pollard

think margin of that margin little Can with then similar on does And you Okay. -- being to the on the it is typically I focus lower bit I shift Or Great. guess to have that that? comment as little C&I, DG a business? a bit a in profile the residential? side, the

Kai Strohbecke

premium. also I bit into structure, command value little panels of format segment, panel, But from is they're that -- They're format a and of is make. typically more different. we a a subsegments And said cost specialty typically segment these then commercial other which costly applications carports to less a so lower of things sell little do margin. that are earlier, the C&I Yes. as like and the

is in sales but bigger a So the well. also come profile yes, bit little chunks they margin of as lower,

OpEx required into channel. less them So there's move the to little a

Kevin Pollard

Okay. And on guidance. quick one last the just one

step-up So the decent QX is implied in EBITDA. a pretty

embedded I I think that seasonality QX? an that. there is in heard in referenced in improvement earlier business you the in DG quarter-on-quarter improvement But

Kai Strohbecke

If DG a into you absolute the more is talk slightly healthier shipments quarter-on-quarter the and on again an we there them there, margins to to compared Kevin, quarter. would expect on level -- basis, also third be

for EBITDA more that effect about So and we gives quarter dollars us seasonal, but recovery. Maxeon given favorable have talked then the the both effect that the reasons we will a also volume for business basically the margin

Operator

Instructions]. [Operator

of line Schafer from comes Our next the Donovan Capital Markets. Northland of question

Donovan Schafer

of was So do side could I you of out of there the some little flesh kind you C&I -- want with are direct a to heck lot because the force. historically, to offer. a you've got organization, of sales C&I-type a larger products bit just a business a kind sprawling of And

market CVAR I But the or in own in then what And still Europe? channel, SunPower that's owns of if commercial You then you kind U.S. channel? a talked CVAR there's forget like U.S. historically agrivoltaics channel while value-added SunPower, direct that's have when also about also like was your the that like if resellers. C&I and part stuff. having there something the of in

go that like retail And Air And different have again, of all if with you're they'll was of XXX even on you -- then the so pretty you a retrofit going there building. -- Maxeon roof panel whole go you could talking There's in that to that if also, kind that fantastic space P-Series. IBC like be are limited, then is have stuff offerings, have old Europe big but to box stuff rooftops the be can years a and channels. you've got cases in going product the to maybe was be lightweight where store, about suite with not

be of if help got. can real the kind that you've to offering emphasis of you a instead just Where just is? the would of I'm parts us wondering update of where it's us kind bigger are? helpful. it Anything And sprawling So about think just, there -- again,

Peter Aschenbrenner

Sure. one. I'll that is take Peter. This

the approach SunPower, of both, where of of CVAR years installers believe, a generally got commercial, commercial size. X.X -- say, in that business fact, channel might channel ago. in some out in continued we lot similar do but that to, organized similar we specialized to say the small many a SunPower a for some of was have had customers that I We've and up time kind small structure the So of commercial, in primarily roof many serve Europe in -- terms are but megawatt through installers it's Europe.

installations said, prospect a shade you can owners And that own fair as things technology can energy some all there's a X productivity, being as opposed from that is on higher certainly to building, longer-term in of want the And the our -- benefit share higher addition primarily efficiency, savings. to delivery year tolerance, focused that deliver. there

that same in the in market. the see we to of you and So distribution residential, buying of of part premium behavior kind you that do commercial cater

in expensive the a volumes again, product bit introduce year, little car limited lot and of you demand And that meter beyond Air, BOS reasonable the higher slightly larger small amount space have players do of sense. there's a light of to as we a the serve that because case U.S., -- park, I'd commercial then or to connections next the -- specific say, in legacy also of serves -- makes the of In land of players where, segment. a market. of planning where behind-the-meter kind EPC our some applications because mentioned, Maxeon a that commercial, And

market's C&I the So not new for us.

I of little bias to resi market a a inventory think side clears. what bit that is on new mitigate of is that the more until slack towards the

William Mulligan

would have talk business. a Italy, think add, been Right. do fair constrained already Europe, we for amount in we don't it. on up a But about And I our lot product. very And IBC what in of I example, until we C&I recently, supply particularly

huge legacy can and it into historical focus fairly some So been us. like hasn't for here, But a a knowledge connections Peter we lot it's like feel quickly. something given move that of we we have said,

you're is Maxeon be really right, could plans. which our Air, in excellent applications. product for that still mentioned also of a And number He a different

Donovan Schafer

then the my second I And of this recall of from video you I'm Intersolar -- Okay. for a this I is, Bill. Europe. question to you, off of trying kind a top have clip is I watched head. believe

So be I'm incorrectly so here, remembering wrong. to me things feel might free some I if correct

talking in were topCON you plans interview, the with But shingling. to P-Series to the about move

-- would work equipment need So same I'm premature? sort just you shifting the meaningful that, really if -- done And -- be or type there certification using do or if just to dicing you basically is to have would topCON. or if be And that be if if you and a of kind that then there if around curious just additional would have? of validation around any it's timeline being enabling that's this investments shingling slicing of

it's stuff performance then and in incremental would there with sort of benefits? magnified Is mean, mono the trends be that special uplift current any of if of durability, -- efficiencies or you just And just lastly, I that's an in PERC topCON? technology kind know -- keeping know I if up about or cells? you or this I kind any multiplied solar with doing started get if benefits? with general of

William Mulligan

Yes.

topCON industry. maturing factory It's will right Good the Great. Okay. question. now rapidly Yes, our technology. in use U.S. new

So with That get to harder the stage. not it make it in being much -- charts. technology up risk very and efficiency the said, at at high-efficiency further cells does this move there's harder you

Our space struggling and intel in are of is currently companies that that costs. there the yields topCON still lot are a with

issues because Our us lot long, of the converge in well. to preferred on very we to address actually when of issues position puts long a these solar start in a technology experience some designs, as high-efficiency high-efficiency cell converge

us And so we a really expertise that topCON technology solutions think world-class can manufacturer. have and I make

that's the be we of long so our able not of TBD, doing technology. could PERC and it we or because be our forward part still import it out had for a is U.S., Everything retrofit capacity, will very well, likely but Whether product into topCON And old going to to some time. being that strategy. that contract

Peter Aschenbrenner

for Peter line our be just forward it's our Don, in all technology -- will going topCON. performance of

William Mulligan

right. That's

line. performance Sorry the for

we're course, well. and expand continue our Of to going as grow to portfolio IBC

Donovan Schafer

on a just things. clear couple be And Okay. to of

an other struggling when yield or for about said Bill, something not yield, the talking So you're yield manufacturing you -- companies on the like yields, energy cells?

William Mulligan

of bit both, Perhaps yes. a little but

I think...

Donovan Schafer

like Mexicali would And you not... that that of be [indiscernible] sort be then say, would so you're saying, necessarily some facility? kind required for, a Not you're there retrofit the of would

William Mulligan

we ago, Let's of Yes. had just hope We this years not. built couple a facilities those Yes. seen coming. trend

to that we just economics question So of facilities It's if a additional space pure additional of investment upgrade, the necessary. did in payback. plan

And work X-gigawatt factory that the a do have math. consider we that. hands now, build a lot our on when we'll right we'll time so in for Mexico. to New comes, of here And But

going to on that. So focus we're

Operator

And back question, we'll of Shen for welcome this ROTH Philip MKM.

Philip Shen

and I DOE you until perhaps year-end so? Just wait had a the of closer? a or month have guarantee the few Could wondering when we Are 'XX? could new Or or in if think of facility. the to us be loan be getting into could next do finalized? that the was sense timing we give on it you

why sorry missed the I today And it. has wafer guarantee us us announcement not remind announce a facility locked help then this loan or finally, And earlier, of what you understand been secured so provided? this sources if be? supply that also, with the then mentioned have when if you would can you And in DOE wafers,

William Mulligan

the we for site-specific All financial Also, right. due selection really site-specific bottleneck little do, bit It the of site for longer we things completion review. liked. really taken than Well, the a unfortunately, diligence DOE they the Phil. diligence. a has has have There's model details. project we can't finalize to process, been until knew the like certain amount environmental including Thanks, of

that's So done now.

point. we forecast on to so that. be Peter at a I'm the a sort to can able also rapid little project color situation. Peter to And of from expect wafer timing. we're closer to this going hesitant clip that forward been some has And give this move Perhaps supply

So...

Peter Aschenbrenner

Yes.

diligence. On see out Phil, obstacle here We'll terms of of approval. sort of of think Bill completing the conditional the in I major what the timing the a into the as DOE terms -- is timing, of last way said, this turns in that

to the the in in looking of this project customer project, about planned in would investors of On commitments. we a would wafer we the all there's offtake and and variety I have I would would well to we handle people U.S., way the tomorrow, have that to that. formal know sign in and say it. with locked wafers that objective we on That's our midterm thought at now, the want loan we give conversations And is that those. time normally the for the as supply a our the at in source as able be up. the of wafer think terms event supply, go-ahead We're site DOE But why

William Mulligan

a risk purchases do Yes. moving the and will We certain long us And to timeline lead I right? mean forward. time it does maybe to some of allow engineering get keep amount moving,

we So couldn't the unlock until -- of we really all that can't we hit site.

Operator

Thank As all we the you there conclude call. disconnect. questions, further may no again, are now and will you now

Maxeon Solar Technologies (MAXN) 10 Aug 232023 Q2 Earnings call transcript