SPWR - Earnings call transcript Q3 2018

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Operator

Good afternoon. Welcome to SunPower Corporation's Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time.

As a reminder, this conference call maybe recorded for replay purposes. to call like to now would turn over the Mr. I Relations Vice Corporation. President Okunski, at of Bob Investor SunPower

You may begin.

Bob Okunski

call. Thank you, third conference our welcome everyone Brian. I would quarter like XXXX to to earnings

off to On financial turning with by the results Werner, followed who before our CEO; Tom the Manu our we third will call will review Tom an and our for strategic today, guidance. operational review Sial, CFO, back by call start quarter XXXX

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

reports PowerPoint to we will of will our which of X. are data may over begin that, this metrics page we website. to are also the those In see During make affect as our a we Relations enhance who Harbor of Werner, posted SunPower, today's call, call like Presentations well. and the that location, a some of today's call, additional on will same for the have documents reference call To quarterly our in risks forward-looking slide the regarding these I'd sheet that supplemental Form & Investor turn set statements uncertainties historical XX-Q. slides the have Tom? on Events release, detailing those that Tom today's statements. With we factors presentation, during XX-K, press subject CEO Please and of forward-looking information Safe posted slide various XXXX described our on

Thomas H. Werner

update financial you our will performance thank roadmaps. provide us. we an review our technology Thanks, this quarter for On joining on Bob, XXXX call, and third and

segmentation. of additional our initiatives the details discuss will acquisition our new strategic and provide our status SolarWorld on We including of

highlight to XX% up First, further to forecast our QX, year-over-year. particular, QX continued growth was our broad-based DG business DG our meeting core international the themes. well sales strength our approximately technology EBITDA and global included Japan. in define with I'd our the simplifying in corporate and will We like footprint in This help turn was further the In in outperformance Europe, is slide X. enhance structure. Section U.S., executed Australia, quarter. Please us We This that pleased as we the petition exemption during which U.S. business, by as granted tariff DG our the administration decision market. in our and manufacturing XXX well were XXXX

from in as As inventory. given a timing recognize our until reminder, we will quarter of as expect decision, approximately XXXX, the our financially fourth not deplete remaining the tariffs in the million we we to tariff benefit exclusion $XX

Our power plant equipment business QX was in by the disruption impacted in policy China.

QX several this Following in well. change announced our we FIT product XXst, May revenue agreements closing policy pricing for case market QX and to our the equipment of P-Series stabilized. be the This delayed on supply volume reduced China customers expect in until and as

we equipment and of then, achieved backlog since power volume sales in planned now P-Series record our bookings global XXXX plant have in contract. over XX% business segment under However, power and have our plant

future for and leading our slide detailed downstream venture. We've industry-leading overview of our providing evolution a would minutes the segmentation to cell success. DZS Technologies to under of manufacturing combined of positions Oregon as technology international we segmentation consist operations, as as few and development acquired one turn which residential to QX or a business segment. which technology facility SunPower quarter, well Energy I American SunPower this and joint in expansion like decision our or us upstream to believe Please as at on made all And well NGT at SolarWorld new our our spend we the SPES newly a SPT why of X. capacity ramp for of sales. new units well named track, North P-Series upstream these including panel businesses our remain and Last Finally, our the commercial reporting. and Services roadmaps technology, transition our our includes

significantly the SPT time across well of comprising slide, in and North DG technology, R&D When the most SunPower and to left desirable is applications leader a for product cost solar but capacity the with be similar industry the XXXX organization. plant P-Series IBC Asia will levelized we global mono-PERC between to Technologies best-in-class with of per product segment approximately technology. X-Series to and durability. our manufacturing due similar be and cost technology manufacturing operations, of as in evenly energy power both is world-class our production SunPower facilities ramped, marketing this On the X.X-gigawatt cost. watt technology higher NGT superior fully sales panels America. performance customers split as solar long performance NGT lower and products offer brand. that will and expect will manufactures

NGT margin increasing significant and expect mix by SPT driven in improvement We scale.

businesses, states. from the hand DG On the which is residential right our the slide leader fleet share market and with includes of systems and SunPower Energy as over well management Canadian million or The asset Services as commercial U.S. U.S. is X.X an performance our SunPower systems attach distinct of SPES across operating data ground of customers a and our combination deep solar XX side complete increasingly this mount applications both channels. operational for storage fleet roof, and residential both fleet. existing as understanding C&I of in we characteristics advantage carport, system SPES through a to new and solutions and group. to indirect represents delivers direct for SunPower our

structure on include Our We battery believe greater increased change unit of margin as mix products. over North faster this that Energy We Services. inherent to based and solutions segmentation each expansion for SPES disclosures. Overall, investors business segmentation, transparency. it increases as QX will slide decision American these to solutions well we P&Ls, year-over-year. increasingly in the making, financial DG believe by well enabled will quarter. remained turn In storage service as by our offerings the drive SunPower residential, highlight technology, of X. solar-plus-storage or with SPES performance control grew new demand as quarter and proprietary cost platform easier the in this discrete review new this segments, megawatts our and Please the our executed I using management, starting time. will XX% drive now focus financial solid BU, our that making throughout on will business model business value Overall, our for

mix XX% mix. of accounting with level record with of Our our in for cash and lease product for our forecast was line loan a demand

XX market the deals being C&I, industry-leading maintain our significant top quarter seeing our the position expanding our new over solar reflecting XX% partnerships With more continue XX% particular, megawatt in of installed out XX XX more in the homes expand of XXXX. to the and continue the in XX capitalize we're scale, multi-site we commercial systems, growth we business opportunity. the growth homes SunPower in a to to customers. California the Additionally, mandate position new our seven leadership California, with In top experience the of enterprise year-over-year users quarter, In deployment technology. we're for in leadership very year-over-year on X XX,XXX homebuilders, during top well-positioned with ahead than to of and shift

with recently our rates with growing see savings. Helix customer interest For of booked to Walmart. attributable attach strong demand We charge number driven XX% in including XX-location enhanced enterprise example, we solution solar-plus-storage deal a and XX-megawatt economics deals by a

are forward, annual than Looking for XX% DG we forecasting business our U.S. more in growth year. next

resources to market the particular. business allocate further to drive continue and we residential expansion share new homes in in expect growth in We

currently market gigawatts. associated and we're Growth our in in driven offerings. Our X. cost are in include including this turn California, attractive specific of customer storage commercial pipeline of by billion XX% states, conversation which market to and solar-plus-storage number megawatts under opportunity economics remains going contract commercial Almost at hours fully we our new high in XX market Customer a solar have pipeline a element According storage $X.X solar-plus-storage reduction at is result storage storage. through to benefit than customer that over would Mackenzie, interest around customers or Please Wood slide A of this approaching Helix XXXX adoption. sites. existing XX-megawatt York. driving is both The booked of increasingly to every strong of key expected forward or operating platform QX. and is now We for a CAGR million. of policies behind-the-meter a and $XXX more is X X Massachusetts, business grow New and system and commercial with service than more XX% with mainstream have of attach rates

the for forward software working Lockheed partnership look global maximize to storage out customer. storage XX-gigawatt our to optimize leader footprint. given pleased battery to performance algorithms also to technology a installed storage base system ability build closely us in better and savings our to space that Additionally, the our the We're with Martin, continued be drive has

Our adapt our and commercial residential is to near-term solar-plus-storage to experience that leverage in plan market. the

significantly We our systems our new solar-plus-storage scope homes storage through residential to-date, group of primarily plan the we XXXX. have installed expand hundreds residential activities and to of in

China we've solar led persist volume until margin delivery SPT DG push-out. purchase XXXX. stabilize. to-date turn on have impacted customers expect pricing overall our however, a and in bookings the Please with we equipment planned currently of the plan. Let's in of well in in were to quarters project sales to by experienced slide SunPower X. first well XXXX We hold power volume due turn XXX-megawatt XX% contract. in three disruption our margins market impacted panels this power by over P-XX strong order mid-year ASP executed above coming the and very on for P-XX plant international move In booked to for several QX plant putting timing throughout solar QX market under in This to volume, Technologies. and Sales decision and policy with QX

reduce expansion able scheduled were of the we QX, margin elsewhere. the through impact to push-outs For

targets Our full solar Fab utilization. quarter NGT panel cell and well in again development the with ahead average plan cell solar of XX%. cost and meaning yield for of business executed QX, efficiency is technology with manufacturing

certifying first our will are NGT at format in We XXX QX. a watts to that rated product, XX-cell panel delivered customer initial sites currently be

a enable to to other NGT options pursuing gigawatt variety actively and also partnerships are of further We scale. expansion

capacity with is plan, at our by growth This volume planned revenue Finally, the the XXXX. of gigawatts ramp to P-Series X and to of end drive venture us will reach allow joint in DZS significant on QX. technology

acquisition As this previous know, acquisition statements. asset rationale SolarWorld a quarter, is slide to U.S. what is to see The take for turn X. significant of closed we we footprint Please our expanding you growth with our opportunity. manufacturing our this the consistent advantage in

demand, market particularly feel what is the by The we invest we catalyzed right is to XXX DG sustainable the segment. First, in serve was Section time to the manufacturing tariff believe domestic acquisition ruling. U.S. a in

the Second, customers serve efficiency acquisition will manufactured us technology. with locally to our enable P-Series high

operational the we and our believe, very synergies been new skill and Finally, in quality of XXX we've impressed are employees with the significant facility. over Oregon there

will Our facility for be initial the at production. P-Series focus panel retooling

the $XX XXXX. is up line. into targeting year. to being XXXX up of to already CapEx million expect We volume megawatts XXX We're equipment with to manufacturing and existing manufacturing onsite next initial end of production total integrated P-Series of of the P-Series QX in

our made balance our in like related business strategic against guidance. significant turn status briefly spend sheet initiatives. to acquisition of Please our In non-core delevering against to would I execution Finally, expenses We've key CapEx selling current and are the to model progress our and cost assets. simplifying summarize our our by slide the conclusion, goal X. included

result, focused completely and delivering more a we improved on value. SunPower As leaner, believe XXXX, into heading is transparent, that shareholder

and our made DZS internal multi-gigawatt We've the that to the financial technology of now in Scale-up proceeding Oregon our and at QX NGT of track P-Series parts the in production. We're excellent drive well we ramping our in of factory retrofit our key place segmentation. accountability confident report underwrite. in and investor on development capacity will two finalizing technology visibility with our of process our commercial progress also are of are is greater beyond improve results new We in this into business.

we a strong we Looking feel the forward, are competitive position in in U.S.

footprint review XXX technology and we call financials. SolarWorld turn over to Section exemption that, With to materially our Manu Given DG expect and acquisition, XXXX to U.S. the I'd our the Manu? to beyond. in increase like

Manavendra Sial

Thanks, Tom.

a turn slide Now, Please forecast. with for including were let we financials. EBITDA to pleased met quarter review me results key XX. milestones our the the of We adjusted as number

our plan executed was Our project SunPower out in by China below non-GAAP revenue, with was JV our Solutions as certain revenue segments. as sequentially, line in all business. Power essentially line while were guidance in international well volumes we of P-Series plant delays our in impacted

Overall, saw to margin our guidance both end non-GAAP the was DG the higher impact higher below side, our year-over-year sales global was more due residential than gross of segment. was of revenue X.X%. growth lower plant consolidated equipment strength the volumes. margin by slightly power sequential and This we On project our in as push-out in business our offset

results million lower charge developed for our projects plant Our retrofit also as of versus margins a project. as gross previously one-time were last due well margin power of quarter to timing the certain $X reflected mix. Commercial one

improve the fourth in We expect commercial quarter. margins to

we million million $XX in the $XX For $X for recognized in commercial. with quarter, million and tariff residential

expected our until during end mentioned, financials year previously quarter, As technology we continue QX were the receive line our million. the recognize essentially in is XXX versus tariffs the remaining are to tariff to total sales exemption impacted lower we power Section In charge. segment, the inventory sequentially impact margins retrofit did will in and have planned, our by tariff of project $XX equipment delays to depleted. while also and we our plant

reminder, business tariffs. the was sequentially development million North product approximately with margin and in a we saw we quarter. quarter. strong our the and Overall, American U.S. In residential, reflects results essentially our last of portfolio $XX the XXX for approximately lower XX% global Europe in Section As exited have sale

plan XX while XX% North XX% initiatives, resi processes, of on in were these our and control were leased. quarter, was shipments margin with line cash more Excluding levels. historical with our $XX few Non-GAAP a in down products Overall, be tariffs, million strength Fab discuss as continue forecast. OpEx for line CapEx $X Adjusted our managed slightly target now XX% our for line a segmentation. improved we we was deployed to our of financial for residential of to supply in sales $XX NGT globally driven our benefit highlights at XX% Please chain by X. to than new to XX. transition will loan quarter In our as EBITDA primarily megawatts DG I'd our the operational our with sequentially expense below from our business. performance, was quarter. million, America, we and turn with the in the our ahead ramp slide like million,

quarter key adjusted a and charges, our goals other EBITDA financial we forecast. previously despite mentioned, tariffs As the one-time met number of the for including

expenses We expense we and and also managed our pleased were from the with results prudently our management various cash initiatives.

drive further Additionally, portfolio our portfolio and track. as business to lease our our American our of sale as efforts microinverter Energy our progress we made and in Enphase, accountability. proceeding significant power to simplify This North transparency selling and the Clearway the resi transaction to greater is in included on Also, well progress of business QX. development plant completion

as deconsolidation in accounting the will complete the of phase XXXX a and plant The If a strategic transactions of on residential by balance the we impacted by is longer create expect clear you final real first and portfolio essentially decisions streamlining a stake also sheet our plan. recent allowing ultimately and power lease QX transaction volatility quarter. rules, in business of (XX:XX:XX) our will of to for transparency analysis be more estate performance. no the These recall, we much in to monetized the equity of a end

improved have than by We our position net XX% more year-over-year. debt

deconsolidation of resi a our declined was a from reminder, As the on debt QX net portfolio, further position.

meet needs de-risk third-party business. exiting will power the we business in financing to sheet commercial our needs customers. continue our being expertise our That to balance leverage decline of the financing further to of a to our plant expect We and development will our due said,

process, started put those achieve us Our we goal, was actions that when profitability. will to enable place in this to long-term

to Tom we believe including As first will mentioned, a and both, improved structure new we I this accomplish segmentation. operational an

expanding DG see we and our significant higher NGT business and drive technology cost existing our new resources on opening and operating cell to increased I margin and driving reiterate providing and focusing markets focus margins lower opportunity income. energy panel higher unit performance and Additionally, ramping our each that investing up our in my and footprint, want improving industry-leading to and new services through operating value-added customers. storage is on focus to by

that, strategic Tom? achieving a more next into With look will sustained our year. the core drive to operating balance opportunities. we transparent market lower back delevered I call committed model, will sheet, XXXX, operating provide initiatives a Tom expenses, As the to guidance. turn remain resources a in significantly for technology and and We profitability to invest growth

Thomas H. Werner

year fourth would I the Manu. quarter for to our discuss fiscal and now guidance XXXX. Thanks, like

a estimated as $XXX P-Series gross X%, million guidance company XXX megawatts. million SPS expects the turn margin million $XXX XXX Fourth megawatts $XX deployed tariffs as As in Americas' equipment $XXX company's proposed the million. reminder, to EBITDA potential the of our of asset million revenue million, the to delays $XXX fiscal Section GAAP XX. of of of a million, accounting megawatts announced timing related slide financial of to X% a Revenue the as sales. XXXX to to Fourth X% follows: quarter and the well Please of range $XXX to of to breakeven in and basis, differences its guidance net includes gross to previously is margin assumes On impact in SolarWorld of XXX project impact of business. our and guidance quarter X%, acquisition our assets, non-GAAP to impact $XXX sales loss

XX. to – please slide For XXXX turn

a $XXX X.XX in EBITDA turn gigawatts. non-GAAP of expects range year $X.X as company gigawatts Balance $XXX billion operational for on basis, to the expenditures capital and of With now expenses billion basis, or non-GAAP GAAP billion and of $X.X X.XX revenue on fiscal would call a of about the the over I in deployed $X.X of gigawatts to range XXXX, million, XXXX billion For million, follows: company's to questions. million. of to Adjusted that, approximately the million guidance $XXX the like is $X.X $XXX

Operator

Lee of sir. will Thank first from line And Brian with question our the you, Sachs. come Goldman

line Your open. is now

Brian Lee

thanks on half, any guys, so I is in that can push-out, you timing then, half, Hey, first-off, is on or since for your questions. wondering, P-Series and that EBITDA all push-out, megawatts first sense for the recaptured second the just help just XXX the adding XXXX changing guess, having And provide? not shipments reconcile not are guidance could if Thanks. this you for maybe positive without to implied year, the you despite actually is really the guidance how this be numbers year? EBITDA, these in kept the EBITDA taking

Thomas H. Werner

joint as of has profitable, is venture it's over a electric but that marketing ship been It product the Tom. the again Brian, is see (XX:XX:XX) the specifically thanks the and On get for, or is expect ramping. is ask first and what product so That This if back in first feel will P-Series XXX the three their is, next the our Hey, is to that things yes, quarters. with a which also EBITDA. going answer can – largest to which said order our I module that is and ramping increasingly And quarters we from three megawatts over but already combination expect the on booked free factory bell next (XX:XX:XX), for you is and entirely don't we not the of you're – happen bell to There's ever we've you get looking evolving year. And the year. electric out question. order just clarify. gotten

this it it year profitable So, than be next we expect to more was year.

do, residential it which DG being our business there Europe, profitable with is replaced overperformance America so, higher that business, And not we the margin. it in we is in in most specifically element and in of an

EBITDA. So, it's on kind of a combination of things two

Brian Lee

Okay. No, that's and appreciate color helpful, Tom. the

SolarWorld are capacity. But Just of and set a you level here. an little then follow-up and month. P-Series, the both also midst X, on help question There's the of which acquisition I moving you be closed E, can lot have you transition. in guys would technology the manufacturing around transition and parts know this top deal with NGT of then early a have that, throwing the bit you a

you much of Just sense capacity have exiting each to And have, this trying to then a are rough exiting XX required any can of of you'd be able you extent in of across to a sort to and targeting exactly at how there's the figures on let's give SunPower? ballpark if where get might share XXXX, sense capacity CapEx what the of us be figures say, months then XXXX? the part going. So, you're point, what these or

Thomas H. Werner

Sure.

– Let you my Manu precision me overview, give Manu top of best I'll to will of overview any take do an and can sort and ask then, I it. add head then,

the of P-Series with start this venture, And is the is year. joint The it pair to in is that capacity expansion P-Series. of going the represents gigawatts line me through IBC of rights let that X.X we we'll a X.X-gigawatt total a X.X NGT – out our have end it. of to So, two-thirds XXXX. X.X-gigawatt by about take take one that. gigawatts, X.X

X-Series that in – about clarify first, XXXX. any let So, needs about Manu he product. of in I'll in balance XXXX, And XXX and jump now is E-Series if the XX of to

Manavendra Sial

spot-on. P-Series because any can books. numbers access we CapEx flexible, The Tom, the without on capacity is highly to got you our two-thirds up

Brian Lee

Okay.

Thomas H. Werner

just overall a give totally the won't you XXXX, leave guiding Oh, but and We're it range. I CapEx, not either. I'll wide-open

million number is can and $XX actually You million. $XXX of a think modest between that

Brian Lee

Okay, that. thanks guys. I appreciate

Thomas H. Werner

Thanks, Brian.

Operator

Thank Weinstein will the you. line Michael come question Suisse. our And of Credit next from with

line now LLC Securities Weinstein - Credit Michael guys. Hi, is Suisse open. Your (USA)

Thomas H. Werner

some or Weinstein LLC XXXX, metric? Securities - about Suisse adjusted when about (USA) Credit profitability you you Hey, Michael talk other are talking in EBITDA Hey.

Manavendra Sial

XXXX, operating to rid business accounting model Number the easier think in and two get simplifying are performance. So, we And accounting. one, estate as lease real once are things. driving we of business of and are the we the profitability there I it's second,

performance of our towards very when Suisse give business operating structure driving in Credit other - the And kinds cash Harbor mandate, NGT expansion but it expect still and on relevant things traditional talk to plans, California is EBITDA an us you metric host P&L do in Analyst plan Safe Right. you and about, terms Michael to So, what plan, idea operating Securities the Weinstein LLC Day, income that themes operating metric, (USA) becomes topics? generation. can of a of you any the our

Thomas H. Werner

If on. earnings that to either you be though, a at need Analyst can announce – half don't to or call to in probably two segments. the you I What publish year, the earnings – input we February we're when the be the preview next do how will model it. have Day going when of your to we'd would mean happy on first the centerpiece we'll color be on to call the give of

that nature. of cash, will of and earnings mentioned, segments, we'll talk drivers CapEx model course, course capacities the you And primary that would focus that the call. of things about things of So, each of the be to the which two segment, be,

out expect So than models – mix of to (XX:XX:XX). businesses, way hey, one they we focus sales, last you of (USA) as mentioned, would of about Michael with - you and cash course, LLC last that Weinstein about straightforward the forward of but be two come Suisse leasing more Manu those going years. models be that would Securities the been of how your Credit the have question think versus do And, couple both

Thomas H. Werner

Yeah.

per behavior is give and between increasing. motivate see loan I choice loan And is is see now We not it's cash. lease is more we different others that And we that we the customer cash in behavior. think that those. see, loan of And I se lease. and than actually than it the something customer So,

going let as into percentage, say, I'll you to give you specific so, go-forward QX. I QX, Manu cash expect will loan breakout trend numbers Manu year. we but would give a for I a and but And the in the increase that continues think next on basis,

Manavendra Sial

Thank All were XX%. - So, and LLC Securities for right. lease much. and Weinstein XX% (USA) Credit Suisse QX, was Okay. Michael you cash very loan about about

Thomas H. Werner

Michael. Thanks,

Operator

Thank come from Merrill you. And Dumoulin-Smith our next will Bank of Lynch. with Julien America question

open. now is line Your

Aric Li

for This Hi. is Julien. on Aric actually

First...

Thomas H. Werner

Hey, Aric.

Aric Li

...I or those with higher offered wanted P-Series to was being mono-PERC down? the about can replaced you up positioning going that both well wanted on well exemption Were delayed to products heavy hey, as Section follow push-out. XXX secondly, since just as that the against as the upon, XXX-megawatt U.S. as And price touch landscape spot talk timing? were just efficiency declines in Thanks. in of in step from hand, falling recent competitors competitive tariff to light June, forward, orders

Thomas H. Werner

Okay. There's there. lot a

questions. Let me answer those

of First megawatts push-out. the all, was a XXX

the the That price a was Fit which future. customers was There still same the same customers is by in of the So, are discovery. period Chinese at period caused over, least that change.

will that biggest that against world. in be In nicely ramp terms venture venture as the far, to be, shingling positioning joint it expect of the and scaling quite joint we mono-PERC, note our and that it's by we will cost competitive technology it important is

think allow to – produce in the a those – same, allow can lead similar cost have also exactly And the technology produce effective. so, in in shingling can on a form to form us and we a factors We us to will us we be product of terms the have wattage not but size, have output. allow various factors product and bigger we

we more can area. similar in a So, similar watts position cost with

you're is company is of has plant to tale is than going DG that a been the the way the mostly, IBC on and Section in of or therefore, flexible the to I line mention want terms flexible power restructured market market, per QX; plant – is difficult whereas, that in a XXX, of power be focused focused of also very, has the a mono-PERC more very different which balance actually more inherently our lower if has capacity QX in structured – joint very the which so see and the In market, we is facing pricing very pricing two into watt, little and CapEx market. venture P-Series markets. has attributes, with In is and it's most on a difficult, our capacity.

Aric Li

then, that the briefly And XXXX acquisition, instance, same? the is reflected guidance following where for SolarWorld just it. just given up CapEx, Got was that held wondering the on

Manavendra Sial

EBITDA from me is have acquisition start point were to even SolarWorld. So, a a perspective, SolarWorld from P&L, number that, hold to our a with the is why which – cash able we P&L with we of a of impact from and view, asset we perspective, in our let our there minimal cash the guidance

Aric Li

Thank you.

Operator

Thank you.

come James. Our will from line with Raymond Pavel next Molchanov question the of

Your line is now open.

Pavel S. Molchanov

question. taking for the Thanks

headwinds about down to the broader headwinds? about year-to-date. in you of to decline that you're a from feeling directionally, don't more or with is sales mild mix You've your like talk own industry-wide Chinese pricing own pricing, the XX% impact module alluded are you what a seeing XX% price but your consistent know I

Thomas H. Werner

power Pavel. it Chinese the direct QX to if And the direct the written where as or a And CVAR, QX price Significantly you've our actually plant that's North the still has for is picture, almost you've whereas, had huge with between power and decrease; as America in break decrease Fit we plant is saw in stable because maybe you RVAR saw of we plant percentage a down the the QX market market, The resi on, brunt and and which channel, of power commented the DG, you (XX:XX:XX) about different big of happened. pricing slight new translation a change, of seen commercial, market business DG compared in it. homes, question. Thank less, what to even majority the saw. in-line pricing our segments, way than

Pavel S. Molchanov

Okay.

others have essentially the the on Is yet are there exemption, with exemption Let you in is trade XXX finished yours back some or me guys follow up it Section understanding September. to come? that your that got tariff representative

Thomas H. Werner

On communicated they that there the – it not agency our – be that sense that we on. might interfaced that getting passed, the the case. of took we tranches longer committee, or within time as they were work that And may the be more

could things, a and the what at and is tell are So, but the they plate you that best I pace any still with idea is I no quite have on bit further decisions. looking working have they their

Pavel S. Molchanov

All right. Appreciate it.

Thomas H. Werner

Thanks, Pavel.

Operator

& Cowen of from line come will question Jeff next Company. with our And you. the Osborne Thank

line is open. now Your

Jeffrey Osborne

I exemption, heading headwind you or you to to that? the of to Good XXXX? take flexibility EBITDA think in think passing about on great. about, how do Section want was XXX share how about customers what pricing Hey, into essentially afternoon. just we on your pricing Are with terms an talk

Thomas H. Werner

Yeah, I aggressive of think DG on that the more share, take is pricing in it be (XX:XX:XX) to would segment. particularly

We are are say residential, significantly the vary in region we commercial though. more should residential of the profitability country. can by share In conscious, I business than in

with share. a we're driving business. we the In costs more can selective a scale we're the in think commercial that in aggressive so, be And position in down residential little on we business,

so, what think, year. business. plan pass And I we a our that's is because it's wouldn't little on. DG the And again, next that in different, I it all we're for say mostly

Jeffrey Osborne

Tom. helpful, That's Yeah.

and and higher understand part that had great you margin offering just pieces I Just evolving then attach you've moving get of of is the another efficiencies? innings, as your differentiation given to know about the today? generally But it as that's gross there degradation relates potential terms going bundle question maybe the up the rate I was, sell what revenue time, in general it the and in just solar-plus-storage can't that business is just going to you detail early rates speaking, is to a solar-plus-storage, into I the Obviously, higher, margin are. want ecosystem storage but over some attach as you'll there with bundle relates up. get just but terms, as specifics,

Thomas H. Werner

Yeah.

installed a storage. small very So, we've pipeline of in our portion

been storage hardware Storage SunPower. accretion And on that's margin. company a partially, will So, Helix margin higher be storage we're in will currently exhibited of using the which basis, of Lockheed results go-forward It the accretive. not has written because has partner, from the to-date. actual software by or be with dilution Martin our

more we so we quote-unquote, part – that our storage it's as And in accretive. offering, expect And revenue as even our I future, several offering. therefore, Helix add we services to storage other and top so, service as storage solar out of get be on the, and of years look the

Jeffrey Osborne

it. appreciate I Thanks,

Operator

Thank with next line Colin the Oppenheimer. And come question will our from you. of Rusch

Your line open. now is

Colin Rusch

for balance that sheet for from Thanks and to so opportunities generation capital just possibility working cash talk you your the the Can reduction capital? in working much.

Manavendra Sial

two capital I pieces. in – I Yes, think about way think working the

in is mousetrap chain then an SPES capital think, downstream a our one as business, commercial supply the a better there we perspective, across have to (XX:XX:XX) and So, optimizing and inventory the I globe working significant is from opportunity residential both execute, projects.

capital to is We a model that simpler improve much that model a in just I opportunities but the along will very there And plant compared also of are power perspective run should that with see benefit we business without our XXXX. the overall business, are we XXXX working chain is more capital business. performance the intensive and working that a supply a and from working (XX:XX:XX) both AR, AP on on, think, will

Thomas H. Werner

Colin, have let Colin. wrap and Manu's on add a a we're bit follow little then on, it unless going me question you to just to my up

good, good in Our cycle but been not the we've as cash-to-cash working past. is as capital, currently

get cash-to-cash would in better to And definitely expect to to And certain business. get so, parts in we we back cycle. XXXX, on plan historical of would performance our

build SunPower we've there projects sheet in closer that and we balance having our by we projects sheet being we building example. as to our improvement of in could by Services have market. are an established virtue not the on Energy and be market the more financing two inventory (XX:XX:XX) they'll that an built the that an balance is on to churn expect on the our those balance that And responsive plan So, think sheet previously don't we BUs, business, we

generation into So, improvement. or the a of cash really it's focus it's question, here going cycle there And yes, from cash-to-cash working XXXX. company is a capital a opportunity good because huge

Colin Rusch

follow-up. quick a just And Great.

backup are drivers are the systems at what these addition, load Are how application, the getting full-blown shifting primarily for for those In used power, primary interests, point? looking this in getting storage value at what you microgrid sales? are there –

Thomas H. Werner

microgrids by our So, two customer There's us. for things. applications but not some

there'll and And So opportunities – arbitrage very really, soon, today. be illumination it's backup rate demand charge it's is feature. the next

backup charge that we we'll about over And participate rate demand step time, quarters. to next few more the is in then, next and the and So, services to say it's have obviously, ancillary over arbitrage. illumination, want

Colin Rusch

Great. Thanks so much, guys.

Thomas H. Werner

we'll much our segment We spend February. call. And in look and you, right. model time how that in mentioned, participating segmentation the very call All to each forward for everybody as more on the on to Thank I call.

So, thank you very much.

Operator

conference. Ladies on conclude we Everybody, day. and and gentleman, a may you have for today's participation thank wonderful This program our all does disconnect. your

Bob Okunski	SunPower Corp.
Thomas H. Werner	SunPower Corp.
Manavendra Sial	SunPower Corp.
Brian Lee	Goldman Sachs & Co. LLC
Michael Weinstein	Credit Suisse Securities (NYSE:USA) LLC
Aric Li	Merrill Lynch, Pierce, Fenner & Smith, Inc.
Pavel S. Molchanov	Raymond James & Associates, Inc.
Jeffrey Osborne	Cowen & Co. LLC
Colin Rusch	Oppenheimer & Co., Inc.

Sunpower (SPWRQ) 30 Oct 182018 Q3 Earnings call transcript