SPWR - Earnings call transcript Q4 2018

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Operator

Good afternoon. Welcome to SunPower Corporation's Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. to call like to now would turn over the Mr. I Relations Vice Corporation. President Okunski, at of Bob Investor SunPower Thank you, sir.

You may begin.

Robert Okunski

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

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

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

for statements During uncertainties PowerPoint today's XX-Q. factors Please call, additional these a Quarterly that Events the today's we Investor of are our documents described our To those enhance may also which are Relations call, see the press website. Presentations to will forward-looking page on Safe slides and set our make during we statements. affect XXXX posted information risks we reference call today's on slide and have of forward-looking presentation, those Reports this various Form of & in Harbor that subject regarding that the release, will XX-K

remind will we segmentation XXXX everyone like last quarter; announced we structure. Finally, would results under I report to and QX new our that financial our

release slides earnings reflect supplemental and Our press this change.

supplemental detailing of metrics. our same we And the historical additional appendix results in We for location, sheet structure detailing two impact see our historical have details in also some purposes. of of a as posted new XX-K the under today's slide, on the well. segmentation materials website and other IR of our last years for Please posted the the our comparison have in data

at Western our announce and that start Central XXXX have The Grand AM XX Relations I'm Hotel the at Capital website. Eastern Markets Investor pleased event webcast our New will in through Day X City. Time for March York Finally, scheduled to we

on Tom over SunPower. materials of that, CEO the our the call start site With prior post like the also to presentation of event. Werner, the will We I'd turn to Tom? to

Thomas Werner

thank explain call, an for transformation, and fourth and financial our will update in XXXX highlight businesses. our performance, strategic of inherent segmentation Bob, quarter new you value review us. Thanks, will how we our On on provide the joining our each this

long-term First, an transformation update turn Slide on our X. Please and to strategy.

transparency, years, focus our simplifying been Over in business our profitability. leverage two reducing the financial on model enables past has order to and sustainable improve

we Plant our expenses I'm a than business, and exited this assets, lowered and the sheet During this complete to our strategic Power restructured leaner now our balance return organization, reach strengthened development elements annual our is transformation that and to of the this say to objective. is company. $XXX profitability. monetized period, of sustainable operational shifted happy is In focus million. non-core number results that more materially our now a XXXX, to stronger SunPower delivering are namely transformation, There simpler, a key three by

DG higher-growth higher expand customers versus DG premium exceptional market enable SunPower's in markets. First, deliver continue our for leading will brand to to products margin, value products. in we channels our and position competing global pricing

will fronts. two on we industry-leading Second, technology our leverage position

profits. breakeven our operating our cash and lower American of We reduced units efficient flow to these JV, sustainable DZS NGT cost for our achieve services as half NGT First, believe initiatives CapEx us as of this that our by technology, through P-Series business, the for market. second and the allow will year well key position business high-performance our enhancing technology. also in our capital upstream future ramp We've secondly, through the storage DG North of meaningfully the offerings intensity

U.S. cost further to we continue share gross technology NGT in expect Fab X.X see to offerings gigawatt see customer XXXX where profit at improve base. and installed markets, starting DG growth drive and our storage combination customer our expect we to from service contribution margins, meaningful key lower and topline DG forward, via we would X in and of new of a on focus deployments will gains, the upsell Looking ramp of

our Our plan delivers Please X. greater towards model QX work is operating our forecast XX% QX, a greater We strategic that EBITDA to income. meeting our performance in like to in materially Slide well business I'd now and executed to detail. than discuss completing transformation. turn

business Europe Australia DG global in traction quarter. strong with during particular and remained States, the Our United the

become retrofit services leverage We opportunities. Services also our with profit will driver X.X to base we commercial continue respect offering, for to see expect in SunPower gigawatt our and existing important which storage Energy we an growing interest install as

capacity of capacity. expansion our with X P-Series our line track, on second Fab for remain gigawatts operating equipment order at DZS now Our on NGT initiatives at JV and X

reducing delevered more letter our sheet further QX this completing record into strong, achieved facility. balance portfolio, heading also on as very result, is lease our residential a sale bookings, credit We of our in visibility of QX, later. the and XXXX materially revenue We and our

me segment greater discuss in our let performance Now, detail.

North turn to First, X. an year-on-year with solid DG executed business. demand overview XX% remained Residential Slide volume SPES of the quarter. Please American SPES, well growth. our in

in strong commercial added base in XXXX. approximately XXXX lead, pipeline install are well largest bringing loan our a In project XXXX, XX,XXX lease backlog, QX. ended With Walmart compared billion we the in from times our of We with megawatts our homes. and we residential which We growth industry, record significant approximately cash approximately beyond. for and with XXXX to Cabot. share and of $X and already X in industrial, market solar for customers in in in C&I product, deploying of recent mix the of maintained XXX,XXX bookings was demand with line grew U.S. QX to forecast base Our with forecast positioned install awards and XX% XX our including XXXX

themes key have On for several of this our American XXXX. in right highlighted business North the lower DG we slide,

across over to associated opportunity installations homes provide of X,XXX price. customer First, decreases this storage sites. XXX,XXX and our as install retrofit provides us battery in base, with close gigawatts fleet believe X.X growing and We energy technology storage upsell DG C&I unique to a that comprising large services and DG

see expect acceleration to of towards XXXX. second retrofit our of the business an half We

far are for new from share. to benefit of tailwinds a as number leading we including rate we well the from attach tariffs, positioned homes, well have policy import mandate as Second, our solar market XXX of recent exemption California Section where by the on XXX%

our of SPES XXXX. during we drive to lower technology over margin with cost deployment planned also Third, NGT megawatts in expect NGT XXX new expansion

the post XXXX additional and Day Harbor our opportunity program we'll address details ITC Safe at our Finally, we provide are making significant Analyst progress on month. to next

X. on let's each in focus key to turn Now some Please SPES. of trends part Slide

the see left holds the a commanding lead the segment. home hand side within can in you SunPower U.S. well page, positioned of is the rapidly As on new and market, residential growing

right the to also U.S. we On side, residential growth. show the market continued expect

established repeat a player shows XXXX expect Number We including illustrates The business, importance a the for overall customers where of our increasingly to customer to middle leverage our our overall rapidly SunPower market. business. to of market, growing online similar and view our channels C&I mix products market. experience the to customer C&I outgrow our differentiated digitized chart the within Slide NGT, X and is X shows

hand and provides fleet. C&I to deployment sell rapidly growing illustrates right solar significant U.S. of services through plus storage the us customers opportunity such with relationship a in existing our The long-term storage a chart trend Our market. for

base installed solar solar We customer the our storage buyers. of are positioned to industry-leading trend on plus solutions, this well with relationships capitalize and corporate large many of by virtue long-term top

of retain to for repeat C&I Storage new driver, XXXX, project fleet. project will increasingly storage C&I of a systems, expect we existing our our X.X for strong backlog installed services a key be XXX position in and where customers. we both given also but over gigawatt pipeline our forward, Looking megawatt, momentum leadership multi-site growth with have and retrofit

move Let's Slide Technologies, turn to SunPower to X. on please

forward First, together would operational as to in Waters working business of formally role. Jeff brings new Jeff to and a I look SPT. CEO our Jeff to I of like to wealth management with our expertise technology, team, and welcome his team

our NGT in shown factory shipments on panels our our first Fab in up for P-Series targets of plan, We our Our we on of SP manufacturing in to NGT to the shows will the at full of first shipping of in and in chart NGT panels. of first full line in of deployment cell P-Series Oregon, joint efficiency The second Ramp evolution customer production their our well, expect recently utilization. XXXX line again at QX, output capacity sites our volume X QX. for of also our and E-Series product with quarter, chart as conversion executed rapidly, our solar well venture this shipped to Page our volume The in P-Series comprise grown to going middle XXXX. half P-Series meeting plan yield X increase NGT gigawatts on capacity QX order. cost XXXX. shipments to well. mix to average DZS to is in – the fab with total us XX% team with is ramp our have in IBC grey in and allow technology X

and the volume for a quarter. for channels Power demand sales margins with Power accounted very quarter of particularly DG Plant XXX on strong entered international in backlog. strong our plan, close international and shipments SPT driven DG QX sales in for coming megawatt Our ASPs volume, XXXX executed of was Europe XX% demand. orders approximately with to our by well, in bookings We Plant Australia.

position and forecast. to with market. DG some team the left provides date. countries footprint on X continues our sales this strong shows solar into growth slide our SPT the to chart this international of on our expected of current Our DG growth Slide market XXX expand five-year The geographic detail in sales

to battery all time, a this due in decreases Australia. increasingly We expect our countries, solar the storage. compelling core customer CAGR shows product Europe, of XXXX our our Japan by into Keys our sub-segments in highly in growth XXXX We've namely, and we industry to are a growth versus we've volume right that reputation our competitors. in to continue increased markets and this since refer to period, market on economics since sales DG steady differentiate doubling megawatt across share power core XX% the success our driven as and more and international volume SunPower countries. Chart our DG superior these at we expect tripling particular in structured DG what of Over key factors XX%. DG than to performance, our market channel, Europe, success all brand growth versus had over

P-Series our the venture portfolio. joint DZS benefit will our from enhance have Going forward, we to additional product panels lower of priced overall

progress the reviewing Slide I our which Moving XX. brand. under of Maxeon spend to to a minutes the like sell on will IBC would technology, few we

We XX have and leader X in Gen available XXXX. Gen cells the X the past for Maxeon solar XX%. commercially were years, above been starting in solar with the first cells our cell solar panel efficiency efficiency technology with

that R&D processes the cell increase Over XX new commercialized subsequent enabled and to and our us teams XX%. to years, architectures developed efficiency average

Maxeon perhaps level more significantly continues cell frontiers SunPower NGT technology at cost. practical Our pushing performance cell Gen the – enables of this the industry-leading of and or solar of dramatically X lower legacy performance

we which year I over when to later expand will second earlier this comments, capacity my X megawatts. Maxeon are mentioned As NGT line, our currently Gen our XXX in constructing completed

and full of conversion I business from number to brief summary the active parties to to would Maxeon to of our a with Gen Please Slide gigawatts. like segmentation. turn XX. expand in of perspective X In seen the X.X a discussions conclusion, are regarding We XA capacity provide new our complete Fab approximately of funding

focused we're efficient driving highly margin through SPT, and leveraging the of ramp technology growth on platform. For topline our expansion P-Series NGT and capital

in drive Given channels scale to and market margin we as material confident established we our improvement strong are DG volume. presence, distribution ability SPT's

an For customers close North are a installed X.X with gigawatts. in XXX,XXX we residential, to of base market American leader in excess

improves us shareholders. this our Also, deconsolidation of Recent lease leading a array dramatically flexible sector. economics, to strong market strong growth market offer formation as our investors go-to-market our market leasing portfolio – gives growth the business Our position broad for in capitalize and this capture share transparency in and on multiple financing enhance our of the a and options of to the venture additional homes opportunities and structural joint residential expands. channels new

relative our Finally, U.S. rollout in of differentiation business enhance the our residential NGT significantly competition. to will

and and American driving commercial, cell focus channels, energy independent cost associated and transformation share become system a continuing North leaner continued Company more business storage our leveraging have leading customer services reduce base our with to balance transparent, to in by the sheet. growth, X.X we enabled For direct improve completed efficiency. installed dramatically is dealer battery our our delevered In gigawatt to on install conclusion, and of

opportunity of like is of significant With on technologies, would to to completely existing to very a the the panel XXXX, SunPower created shareholder us strong have I to Manu ahead opportunity our call market lower-cost new deliver DG We global Manu? improved review focused into turn that, over this combination by solar financials. executing on the footprint. value. our Heading

Manavendra Sial

Thanks, Tom.

Now, let Please me Slide the review to turn financials. XX.

our started, additional the We've wanted and providing we recasting long-term that our results – we in will you provide of that years help appendix details Before we reporting website, financial deck improves our in get earnings under this and our performance. posted model, everyone and To new of XX-K. further segmentation transparency historical have a our enables better I segmentation added also remind new are to information under our now stronger two detail. understand new

line quarter, remained our U.S. strong on results strong in our In timing Overall, was the non-GAAP throughout were financial key our pleased demand in commitment, ahead revenue residential with our Moving project offset as plan, with we to EBITDA delays the our due of met forecast. quarter certain which with SPES, adjusted business. commitments, execution. U.S. including commercial we our

shipped solid achieving during our performance volumes. quarter and while we XXX business, SPT, For power with DG Australia plant megawatts supply EU in our continued the

gross margin margin last due margins due commercial certain moderately lease forecast. SPES, were legacy quarter was the Our of to as versus while impact declined our our consolidated In mix. resi in gross resi as with line non-GAAP projects portfolio, lower X.X% to well

in the improve guidance quarter, cost in benefited given year. the backlog DG quarter to sales margins was business. we line as was our and international $XX In with OpEx in SPT, margin gross below and XXXX, improved strong strong our commercial our for expect X.X%, the our from We Non-GAAP higher commitments margin structure. million for

to We expect for primarily the in $XX in NGT our ramp XXXX. we highlights discuss XX. line with initiatives performance by quarter. Please expense X. operational control as at to supply chain Adjusted in to I'd EBITDA like million, forecast, our the strength our to million, a was with related business. our for Fab our processes continue to $X DG from benefit now improved driven financial turn Slide few and quarter was managed a CapEx

As we commitments mentioned, financial quarter, met adjusted EBITDA, our volumes. for the previously our key including cash and megawatt

also balance initiatives, and our our simplified transformation We model completed delever sheet. business

working Our transformation in this much seeing as already to from and benefits efficient more our improved versus we've working cash a balance XX% increased declined sheet and QX. We're has as capital inventory balance model. resulted capital

year capital-light we this Another now have of volumes benefit for model our from is material a segments, a more this venture. both SPT much transition will and see joint coming that DZS amount from

continuing cash and prudently as expanding to Our per manage gross on expenses. as well watt focus remains margin our

needs resources in XXXX, most we up while technology streamlined invest to industry-leading structure, initiatives. to continue have growth liquidity operation bringing the and our for the reduced significantly With our

use we into footprint will DG out As infrastructure, the and our our US, expand including service first of look our offerings XXXX, growing SPT. in DG to international year the and the storage through we half build

expect also the year. improvement continued We COGS throughout

the expect we well a SPES in C&I our summarize our positioned Please – half to to much minutes a strong residential of transformation. want performance XX. of business backlog, improve XXXX. few year, turn the financial while the results I take being second Given further and stronger Slide to to

XX% we streamline over First, years. operation as OpEx by structure more last to the our we three point a our reduced materially lowered have than breakeven

margin, OpEx business. Our structure high our global supports DG existing

our our NGT With lower the technology years. leverage venture last more P-Series, improved we to capital have ramp asset of and over efficiency, our doubling for cost than DZS joint capacity three while ability our the light significantly

more our months. debt last than Finally, net we and reduced sheet our have successfully by over the XX% balance delevered XX

in like In of would Slide our the summary, I balance transformation new structure. our Additionally, given and an a time reduction expense for overview turn spend leaner we has company. to new a simpler, our delevered of my Please resulted segmentation. interest balance material sheet. explaining stronger to expect in our XX

new related corporate segment. The current note to the Please formally directly out is costs to compensation first each are either account of that lays units. column used in the parts segmentation. details what column not business line businesses for of our The financial

global lease of mount residential loan consists SPES, of carport and as For outside American this and well our North well as manufacturing as cash ground America. SPT our a as North includes commercial assets panel businesses. our American business North rooftop, business

we in and procures is SPT included in a from away that the XXXX, SPES As to our have transfer we all between SPES like highlight One which historical. their thing agreement shifted businesses reminder, development volume SPT. would have from power a formalized plant SPT I as of is

already details result, new final to a catalysts revenue provides an will forward, not which to column that remarks. our business Tom confident produced is by the on are both in touched in sold financial primarily has over eliminations segment item We going in remain considerable growth on you and statement, megawatts item to XX of tailwinds the and some many our under modeling intersegment The ability see the in offsetting next these his counted accelerate SPT called our segments. segmentation. line months. new a As SPES ensure see by

On faster in forecast. more to in than of revert gross business. commercial, our to and with megawatt costs and margins grow OpEx we reaching megawatt we XX% market the norm expect of we XXXX. our XX%, we margin line previous improvement see mid-teens than scale For XX%, XXXX SPES in SPES gross continued growth as will growth expect approximately historical of XXXX to residential, with XXXX our

project our continue this year, approximately positioned total the targets while to continuing increase as service to venture we expand meet leverage asset-light up and in to our and our capacity our we strategy In megawatts. anticipated well to NGT to rapidly this deployments, Given SPT, cost feel DZS joint will XXX X.X larger gigawatts to segment ramp sizes are storage the in to we well. through nameplate

As CapEx continue decline. watt previously will mentioned, to per

our goal OpEx the For in XXXX with approximately gross XX% margin, in digits. high-single is

also and going performance at financial each long-term corporate declines we and operating some spaces revenue, strategic our the further new detail highlights the on Day Markets We Our inherent segments. are of of is in drive X% on parked structure value additional this firmly less our of improved will at It embarked that transformation will he provide expect now summary, expenses March. complete. than of In now materially Capital we believe forward. the

back simpler the to are Tom I in turn the and cash model, With positioned our Tom? With guidance. to leaner we financial improve for well call our focused that, performance XXXX. will

Thomas Werner

Manu. Thanks,

For our sale well the I to on the fiscal includes which as quarter basis business. as XXXX. our XXXX, big NCI fiscal This to guidance the driven in the XXXX, to the not turn basis. in first Slide improve well to now by year fiscal weighted residential also adjusting both the year, year, record year discuss will approximately normalized commercial occur backlog XXXX. tariffs of a increase the in XX. due in during a of to would adjusted Section for Please bookings fiscal of XX% paid Performance we on quarter XXX as lease as effect of year like residential EBITDA SPT for the expect financial second towards quarterly expects throughout Company half fourth XXXX performance year. seasonality normal portfolio

of and million revenue adjusted quarter revenue deployed of $XXX XXX of of X%, minus megawatts expects million, X% $XX megawatts GAAP million $XXX XXXX gross net the On $XX $XX margin million million, EBITDA $XXX guidance and $XX to in margin gross to negative million. is X% a Company $XXX megawatts. non-GAAP to of the million First range X% of a minus to million follows; to loss fiscal XXX to basis, as to

XX. slide to turn please XXXX, For

are tariffs. of EBITDA billion deployed XXXX, For expects on to to revenue to million, be portfolio not you normalized Company To our NCI fiscal our OpEx to get XXXX to GAAP $XXX $X to number, of exempted. a gigawatts. year billion $XXX $X.X longer for we paying no $XX $X.X of lease need due XXXX, of basis, million, XXX On than the to technology residential sale revenue factors; in Slide providing $X.X the non-GAAP adjust to year; last bridge compared our million in megawatts adjusted a XXXX two and is X.X EBITDA to and basis NCI the forecast range our adjusted XXXX X.X XXX results. of tariffs XX, on billion of million applicable less will as we is comparative Section

growth As increase we more we This structure. to line. model in gross EBITDA margin driven per benefit year-over-year, in as normalized a primarily our result, XX% our than be see from improvements of begin new by EBITDA will

York as March in City. Finally, host New Markets Bob XXth XXXX we'll mentioned, Day Capital our on

questions. We on to financial of new are including for forward and over our as additional overview I on on XXXX that, well long-term as the our would updating segments details turn our a guidance. update looking to call strategy, long-term model our With like provide you detailed

Operator

with [Operator Instructions] Weinstein Michael comes Suisse. you. question from Our Thank Credit first

Your line is now open.

Maheep Mandloi

on questions. Hi, taking is Michael Mandloi Thanks of behalf this for the Weinstein. Maheep

the thanks for margin Just with target regards structure Manu for different that and XX. businesses, Slide to the gross

like XXXX Just XXXX number? or wanted achieve to targets, understand, when to margins to it what's those and delta can in X% And that explain the target – gross between bit is you more X% QX be expect would you a helpful? the that if do

Thomas Werner

when do between the difference about target, hit this this I'll I'll Manu I'll So we Manu and the that let quarter last and Tom. let guide number. or – talk is the take quarter's

Manu? So

Manavendra Sial

timing half XXXX, from back these get early target a just XXXX. to margins perspective, Yes, we of

a timeframe from that's So perspective.

Thomas Werner

economics our the residential, And business the of the the to improve financing both used. gross year, drivers and we two DG. in expect vehicle parts of lease for that of margin different execution we In throughout are our each expansion

from a are XX top expect new XX benefit expect to positive rest year. that we lead, have We and the homes segment, throughout where we of the customers exploit commanding of SunPower our have to home this builders

has have install, report third-party margin this solar then residential. through our might a benefit We a strong in expect core be in of getting where several to These margin channel takes installations. better commercial, finish we'll behind and back couple projects benefit where in do flowing a lead so lower commercial. generally bookings channel that by the the acquisition there's accretion P&L sales year years be less ago customer We it's from driven longer in costs, In last as that The to us. we project had self NGT our things is, we all to are those in that primarily QX. execution in We well. good

megawatt but benefited drivers service then we hours primarily onto in then we services net I and the from of a been utility more that have So business, more back X are storage later, customers' our that speak can the about and margin to those we adding this have for half reduce acceleration. that's bill year. And

Maheep Mandloi

Got forward, over do panels harbored thanks was at loans versus of business? harbor just question And on that just the the Thank of limited what a residential for leasing the I taking on that, in probably expect business? business you and the the had to And going Or that. for the just safe for you cash mix panels, follow-up there? loan which And buy the other leases you. safe be the to be would questions. looking would able quarter

Thomas Werner

any have right. All I'll I'll right. then give let Sure. give don't I level a exactly Manu high specifics, and

XX% Our typically and of volume between lease varies business. our XX%

currently. to because going now it's I'll into XX% economics will safe year. that pivot harbor next to with year And it safe be I this strategy. increase I would unleased harbor expect think closer to better

that cannot. are we have strong will going years strategically cash we XX% can harbor more suited there, The business year. loan cannot we best We this safe safe benefit safe XX% this We're be harbor but one. have So that – for question think current least plan we we we we very is answer harbored and at residential in going we integrated out products or commercial have obviously We can harbor or constructed. of a have is, by our doing vertically not multiple your to being one to after year. safe that business more program of as currently think we or into work believe

will and it lease which our where be So residential, our business business expect commercial expand. to I again

Manavendra Sial

Yes.

the a is about a on our quarter of loan residential, little America and Just mix between and lease cash North over third first leases.

Maheep Mandloi

for Got it. Thanks taking the questions.

Thomas Werner

Thanks, Maheep.

Operator

And you. Thank our Lee Sachs. with comes Goldman next Brian from question

is line open. now Your

Brian Lee

first Thanks the mentioned Tom, billion think for guys. I Maybe during Hey taking the you that prepared questions. for remarks $X one pipeline.

could big was define kind just that that's Just of? do of And then and DG? what get that, quantify wanted a That's maybe number. of you to to that or comprised you commercial elaborate. to if sense just clarify a on was that just total wanted related How

Thomas Werner

use direct importantly, also and we our number, have Brian stages commercial and and number includes unweighted engagement. an that a giving include would that's storage. are where And both and business our system, we So a companies, like we're these various most positive that [CCAR] CRM

Brian Lee

of XXX for or And and X.X light Okay. how that. you us granularity a growth, I of do NGT Appreciate going what's relative for maintenance then about versus a sort helpful. this position about related? growth from of you That's occur? around And we know the involved to to into But of think the CapEx. historical. guidance to megawatt be guess that I is moving CapEx the to how year, how second you give thinking the full should guys this much level more from CapEx the can CapEx conversion are just timeframe bit on of then more question

Thomas Werner

and then on. Manu I'll specifics So start give can

products, the ratio been way to than NGT expand below way the X.X can It's several intensity So note has once IBC all over will our that gigawatts important into megawatt CapEx initial happen from previously. lower years. convert it will traditional we what of XXX of NGT is half be that

our kind I Manu give CapEx What you of NGT all is, on So minimal say year. some we'll would plan guidance now CapEx that on non-NGT this can is CapEx. its

we to calibrate can and in So expect I by implement be will well, would will that would is our I you say The it's then couple the where the how we're something CapEx. quarters timing, about the the we that so is how last that next would of doing. all that much and the say influences that's really CapEx. of talk going driven timing fundraising maybe thing

Manavendra Sial

CapEx, this Yes. to little and bit talked digital from XXXX there's similar is the CapEx is levels is it if associated with a most at for maintenance for XXXX. of the CapEx NGT, Brian we've million XXXX then roughly about, $XX

Brian Lee

thank seem the just you. from I pass non-GAAP helpful. in maybe on. away look was this I'll last they That's XQ under were adjustments to and to it going Manu, the impression one Okay, me meaningful outlook. And still year, but that GAAP the pretty

with could GAAP here about So structure us if non-GAAP new adjustments? we the how the segmentation and reporting just particularly to on the you. should think you update on Thank

Manavendra Sial

XXXX and it running a lease the simpler what fund that we done and first basis, funds new, perspective, in you the structure simpler have have year, you're but going half on second What are much non-GAAP come seeing the you're the we're get those transparent but half. of existed of much first a seeing that's for adjustments the into through, through kind residential come cleaner, our business treatment, call got more gets quarter in guidance. guidance P&L to as in through is that still will in our a P&L What the through we it half guidance come that's Yes. more that back from done the cleaner we is and of structure that a have the you

Brian Lee

Okay. Thanks guys. a lot,

Thomas Werner

Thanks Brian.

Operator

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

check Your your open. line is mute Julien, button. now please

Julien Dumoulin-Smith

you me? Can Hey. Good hear afternoon.

Thomas Werner

Julien. Hey Yes.

Manavendra Sial

Julien. Hey,

Julien Dumoulin-Smith

Hey.

Sorry about that.

on set the to last follow-up So just questions here. of

deployment if you to get say, there then more little what the we potential elaborate the timeline, that? right can be the a the for elaborate opportunities you you're just shall we contemplating? can And Just say want megawatts, for NGT XXX if the solution i.e. accelerated, beyond on fundraising is just you separately, to on bit instruments understand, fundraising should

Thomas Werner

can. we Yes,

So the funding. non-capital non-equity is funding market

since funding, we've partner actually, been So I've it's here almost done strategic something a times, before that's inception. couple

and line may Our in funded Malaysia, with the you actually then customers was funded expansion partnership second by the we recall.

faster at So we're partially in for or to the to a we're say planning dialogue have able three opportunity year end few faster, on there ramping of or If funded NGT the is we NGT to the two expect capable something an that capital. within and to would by partners partners strategic year. sooner, strategic looking quarters, by expect with to for would of We funding what it in of are it's yes, move for we equipment But on or of strategic least accelerate end source bringing or the will certainly we're depend faster. the announce faster.

Julien Dumoulin-Smith

some this, then you kind be give NGT it. shift days, would the to as now here, – that kind talked the clarify, it. And just that just ownership separate about effectively Got combinations to that. of really into lots clear be I of early to you second on expectations versus know kind equity that on think any what about? expansion? Just But in you've of a would of question, start P-Series, scale previously but margins as

Thomas Werner

then actually, Manu both, comment. Sure, take I'll and can

or investment terms product, some are form I example still being the those on could be something it determined, doing there's in the further. In much to back work don't precedence Those things of But itself. an of technology so both that of just I straightforward it up the Julien, of mentioned. the instrument investor. access comment type be an progress. very it individual be to preferential get fundraising, to a could as to can of that's talk I It’s if again a to you in want about want come as

I'll to P-Series, comment over broadly of to terms In hand just and it Manu.

expansion P-Series Our excellent going is way.

that's Hillsboro will in American We've of Oregon supply well. North P-Series ship to ramping and are Hillsboro, started product. going commercial that we We and really with out

the to the our gigawatts year. out gigawatt coming of that's another Of could joint yet course, it almost now, majority and is this venture, volume X of DZS expand

to what in in be exploiting technology. technology the lead a are we We believe shingling

and plant year the sell P-Series also the that and scale say of from we would So we product reconfigured that the channels great in also a DG power margins proving optimistic this the be as in only not we're here we've winner. on see focused but in that market, specifically P-Series to into we differently I think because well. have our is we'll benefit price technology

Manavendra Sial

talked we've about the Just P-Series margins high margins the single-digits. on being Julien,

for is efficient slight that OpEx on But product see just volume you capital a and highly product efficient us. So improvement leverage. highly

Julien Dumoulin-Smith

very all you Thank Excellent. much.

Thomas Werner

Julien. Thanks,

Operator

Thank question with James. from comes Raymond Molchanov next you. And our Pavel

open. now is line Your

Pavel Molchanov

At where debt have it for Thanks on want Or QX point your this comfort? want impactful. essentially The deleveraging be you is for QX to a taking still you do reduction is balance question. you basis? further and sustained to obviously between very the envision that sheet

Manavendra Sial

the question. So thank you for

debt convert sheet from respectively. just deconstruct XXXX and and just balance So if I debt, our the is perspective, a view our in primarily can't they XXXX

there debt. is very that, little Beyond

model like model asset-light sheet is the working nature balance which turn an a our margin our Generation have, much from perspective, and Just Distributed businesses. quick of is that model, more we the given businesses and capital high of we

we model. think the like I So

now. that down an the fourth like right position that a from balance our from is third capital efficiency I point to sheet the of our quarter that's was And think at, quarter. working we have just XX% model we proof

Pavel Molchanov

been level perhaps about Board of to there taken module the in companies guys And having relentless of industry Total with answer that's not M&A management but, may with thinking business you or by particular, of at level? context acquired, helpful. the able ownership about in Okay, be teams into the second conversation in players. so at may the Total one, their some the private other the the taking full any Is the and many Chinese

Manavendra Sial

comments about say on, first, our Total. I'll So

Total. capital believe the perhaps would businesses. units eight benefits our faster. in are strategy. And the optimized supportive is to either importantly make a associated with for strategy that that, and interaction. allocation our of with of be year manage of high decisions they level which importantly, Also We a nimble market and be to and manage in investments have There They're can our is of in can business entities downstream those relationship Company upstream more as we two will changes two

the divisions, into on. path of we're So our the corporate We've X% corporate the heading year. sales the of that's is moved at there still almost all middle by OpEx of

than We less of half expect be that to that.

that that have those businesses. offers for independently year. entities largely two operate And the we think options can will we benefits two and crews So our during

So that what about question. that's I could say

Pavel Molchanov

thank right, very much. All you

Thomas Werner

Thanks, Pavel.

Operator

Cowen Osborne you. from Thank Company. And and comes our with next question Jeff

open. now Your line is

Jeffrey Osborne

Hi, good afternoon, guys.

did Just expense ones do the I missed interest two have from How delivering? about just me, year, you we the But quick it. for expected with that? think might give

Thomas Werner

perspective, as cut Just be from a interest interest about levels will that XXXX expense to half expense you think from XXXX.

Jeffrey Osborne

place, in what revenue goes terms up round us then terms had both And for X-Series for of that and home, commercial, broad think is as content plan to of deployed with being then take of importantly impact storage numbers? happens home there a which goes. sort going Is part maybe can and you $XXX megawatts to, residential you lot your margin? third-party of what Tom, give for if and storage is XXXX about just services is as Okay. as gross you that. any more strokes And attach storage an and in getting per just are the of rates DG There the you – in for

that safe be maybe EBIT there would it pressure margins are some margin, helpful. question on thoughts higher, assumption is that on is So gross but any

Thomas Werner

sure. right, All

in it's resi storage. attach, on So the

with think storage? watt the would more you're per revenue what I how that asking is much – we get

Jeffrey Osborne

be or would any helpful. comments Exactly, XX multiplier

Thomas Werner

that should range. of up think XX% to and you No, more

and Now that services that's in up and near-term, that be of of to should without XX%. is it, the able to what think thinking you might of way the attach we think that's so

Jeffrey Osborne

Any comments on the margin differential?

Thomas Werner

want is those are So and have that and IBC we is – that a On all margins our Helix system, racking. Jeff. – to which a released are product, modules complete our for thank you the we inverter actually commercial, mounting I margins the solution accretive, remind you, plus

only. but team – has that's designed And it's is importantly, So in rate commercial even most megawatt we of some margins do be where grid that Services well, as integration future, on already that that we'll storage, and well us, we expand how business demand part margins. materially buy accretive the the first the the and better software demand charge does the actual already will in commercial Helix the the write early as it's solar also just arbitrage optimization. is charge are the do battery that's And and the and we in installed We've itself, meaningful that a selling X And line, done is hours stages. margins. but – for will services. our service their to

so even margin accretive commercial second. So I residential a first, both gross – think meaningful higher storage more services, it's or

Jeffrey Osborne

helpful. you. Perfect. Thank That's very

Thomas Werner

Okay.

I we'll our last think question. to go

Operator

with Rusch And final from you. question Oppenheimer. comes Thank Colin our

Your line is now open.

Colin Rusch

Thanks so in pencil the market you Can where of silicon that's XXXX, much for for here. going talk out missed expectations value? squeezing me total way in. terms about I the to above along it maybe dollar

Thomas Werner

is the market us good just is it. on of one behind a in and Manu the then say of years – and I'll had that they're We few three now behind or will comment silicon one years a Sure, XXXX. is us on having it's on us. news two out and other The two terms working impact take in behind contracts,

Manavendra Sial

So, slightly yes, levels. the be at than XXXX, but the will XXXX impact higher similar – on the in

Colin Rusch

Okay.

ready perspective, on you from free And guys guidance some to flow are provide cash so that. a

somewhere – it do looks you're the around burning million. I like math, it $XX can Just if be

Thomas Werner

That's right. Yeah. about sounds

Colin Rusch

a Thanks guys. great. Okay, lot

Thomas Werner

all and on for bit you thank forward Analyst to we Well, we you'll in the look more get quite XX, a here. in, covered calling Day March topics

New York Thank in XX. you. March on you see we'll So

Manavendra Sial

Thank you.

Operator

gentlemen, disconnect. does conclude and a you program. wonderful may thank today's And This today's all Ladies Everyone, you in for day. have conference. participating

Sunpower (SPWRQ) 13 Feb 192018 Q4 Earnings call transcript