Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by, and welcome to the SunPower Second Quarter 2023 Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Mike Weinstein, Vice President of Investor Relations. ahead. go Please

Mike Weinstein

would quarter I welcome to everyone Good earnings like conference second XXXX call. our morning. to

On the trends, an call Peter today, guidance, followed we will begin on update expense, of announcements business XXXX who and by quarter an Faricy, recent with SunPower, will operating second provide sales update including and highlights, backlog, CEO comments from financing.

comments, will then financial results. CFO, Eby, review Interim SunPower's Beth Following Peter's our

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

we today's Please may are presentation, today's Form refer Harbor call. today's (ph) press well reference forward-looking During factors additional those Also, see statements. in that regarding forward-looking subject our will today's Please press to during will non-GAAP [XXXX] for XX-Q. documents appropriate Safe call, for of make certain are as information metrics XX-K appendix GAAP affect these statements and various to slide the non-GAAP uncertainties presentation, our that the reconciliations. of as quarterly release today's risks reports the that and release, to Form described on we

the will Finally, set of we additional metrics. we location, posted supplemental to sheet also the a of data reference Investor Presentations and a detailing during historical In this call which slides, enhance the same page PowerPoint call, on our Events website. we've Relations have posted

of Faricy, that, Peter? the With Peter over CEO SunPower. turn I'd like to to call

Peter Faricy

market and into on continued pillar focus to our to important could company. best Thanks XXXX. of QX full-year to our continue SunPower our Today, the approach will also view and our Mike, our XXXX talk platform results, factors world's solar will affect build good share strategy and residential XXXX five morning, preannounced growing the that reduction everyone. investment most our about intended I I our guidance, discuss of

call. Intel. expect Beth that, NeoPhotonics long joining for ago critical months came Financial Chief strategic a and leading Finance earnings activities. from do carrier play her and developing Officer, in aboard welcome and in to I I at organization us the she'll I Beth implementing Eby, first plan two Before want SunPower’s company's role growth a our new successful

quarter, lower generation was we of installations consumer has impact had than even We was most $X expected customer earlier we the in rates year, significant bookings million adjusted the quarter, impact interest second second-half and a that saw of behavior. slowdown on though been of steeper In this as of the negative frankly in higher than the a EBITDA year. expected cash and reported EBITDA this we've projecting we which our initially

Beth later, were will expenses bookings in the results the country across in higher lower the discuss slower detail quarter. and primary more installation of of drivers most As

current our reduced million conditions $X,XXX $X,XXX ranges week, preannounced per we've reduced and including conditions. new force maintain projects These expense in certain investment through projected platform in operating to reflect $XX to $XX we and adjusted reflect EBITDA. to adjusted last new we market the customers, reduction ranges XX,XXX near-term of of new hiring this reduction strength As customer year, market a some to guidance weaker platform million XXXX investment as before to to EBITDA XX,XXX delay a financial labor to

by were solar an business homes XX% builders. driven record market also new SunPower’s Adjusted growth improved and to $XXX continued in price bookings is revenue This million added quarter. in of of costs, higher partially turn as offset higher although X% were impact of increases at in We a Please communities costs for Record realized number QX. secured California the a year-over-year the part outside year-over-year. growth the a second slide product customers installation new to X% XX,XXX four. standard the grew in sales year-over-year. in quarter, increase

trends overall new installations SunPower’s in stands home solar backlog more July strong, any at company. now than to homes has remain channel. other new XX,XXX with SunPower retrofit the another XXX,XXX while over XX,XXX completed continue retrofit customers

customer write-down EBITDA platform investment, installation expense per before reflects came value. at primarily in inventory and some of which higher $X,XXX Adjusted modest

We also of a utilities caseload. experienced recognition customer from lease delay California, in related revenue a than and completion some the as delayed normal State's into we experienced some under QX interconnection higher

attach under rate energy new Sunbelt to continue at a California systems rules, direct strength in in X.X the channel the State. in storage show sales our NEM XX%

climb volumes XXX% the of with demand increased value Lease under continues in drives X.X. expect We to to QX. this contract in number increase NEM grow as batteries storage sales

SunPower advantage. is noted and previously, lease of of capital to due markets we've customer our competitive higher to tax a agnostic Act. bonus remained tier loan believe Reduction or and solar residential we lease As towards payment is company the beyond, and bills centric and access current versus expected further major competitiveness financing that top combination the under leasing XXXX growth utility in incentives Inflation for the

Please turn to number slide five.

QX Our ended than and X% first-half of million X% increase. towards new customers Adjusted XX,XXX new the to halfway of full-year more the $XXX growth midpoint guidance. customer year-over-year with revenue grew

take first-half the Ohm growth value a of industry also Analytics. our as note that highlight market this by XX% share in We grow as XX% versus of increase to project permit the in continues permitting overall we reported year

week, few slide and that that actions I We taking the last to are what negative XXXX discuss of some impact. and to we our to guidance reduced moments number did we are turn take the Please to why offset want six. a

impact and X.X, for pull lead generation we've July. June intentionally been reduced for in recent executed some expectations While decline a here modest NEM top we our year-over-year for customer bookings recovery the California, see a in net though of funnel starting starting given We're in in X.X. to to of and in bookings. under NEM that our new demand we are QX forward strong improvement in with bookings under now the an slower see full-year recalibrated In improvement guidance expecting reflects the year bookings weeks,

earlier, saw a to As storage sales I XX% California X.X, in quarter attach second system rate are channel. increase in in the stronger XXX% Sunbelt where SunPower direct under NEM mentioned we

California, second been is earlier are lead York, funnel notable New reduce beyond quarter generation major net behind since bookings that's stronger we and this of a and a more decision than boosted Looking May guidance. have driver progress point States, Nevertheless, top Illinois. weaker in improvement this to seeing our in several and stronger been low year, results in our including expectations the Connecticut by bookings

the this face record New QX of homes in bookings have interest Bookings NEM with year, homebuilding more resilient than accelerated ahead in higher been set of boosted by a our rates. in new April. projections the to expectations industry ahead sales of tracking expected X.X all-time

projected of second-half to backlog position customer in and midpoint year. the of to is trend covered by benefit gives XXXX. dealers final in Importantly, combination confidence with of year installations. component XX,XXX more installations customer recognition of we recognition SunPower estimate of new this and customer that for We how in the range the homes the from a of sales expect outcome to reach the XX% the more our new backlog than new remainder the us incremental guidance bookings to the on This dependent

as reduced guidance few and channel customer have margin XXXX over installation direct lower to go this EBITDA lower year result inventory per sales in pricing before a costs gross platform EBITDA and for spread higher reflect customer mix, minutes a mix, will of Beth been As investment over cost, volumes.

strength As also financial expense the of earlier, reflects investment and as operating economic we and maintain I the reduced market uncertainty. reduced mentioned guidance platform some delayed near-term

the solar SunPower distributed continue penetration, market to gain to is market develop. adjust share the Inflation under climbing to grid continue including we judiciously decade Long-term, plan see as tax tailwinds our position conditions Reduction investment U.S. of bills, Act. strained We as continue market, to and to Platform benefits change. a for pace utility substantial a to investment electric intended conditions low

we're Finally, reduction, in liquidity year. plans capacity, inventory intend manage an this during in second-half of cash customer projecting place. with this for expansion and to continued from We of the operations improvement financing

seven. Please slide turn to number

our the bulk hit these have in wholesale I seeing increases continue rates conventional virtually utility More as power year-over-year X% and cost rise grids the in recent with to the of Agency key waves electric despite reports utility want strained May, bills States XX hitting reemphasize heat Central for increases Northeastern fuels States such electric to States Information as that heat summer to are in continue U.S. The gas. Energy moderating the other rates and West natural XX% everyone South competition than Price upward industry. average With year-over-year. electric the well. Texas and customer waves California greater retail primary of days, that U.S.

most Electric continue a over previous the home customers and and believe electric the to reduce Edison investment the impact as increases three cost powerful and We Institute XXXX stabilize solar prices, value instability of residential bills. one elevate residential proposition is ways lower the Despite grid that XX% of the XXXX years. projecting to on the utility the from steep electric capital increase of to fuel

through recovered rising. bills, we continue to rooftop are believe value the investments continue that likely of finance electric these As is solar to customer

Please eight. number slide turn to

you strategy. the as QX some move of important pillars long-term we share I'll with of most with Next, in our we've the made forward five progress

and last year multiple reviews one solar our experience, the installer remained customer by For number SunPower ranked home ratings indicated on platforms. as

XX.X larger an hour nearly system new of kilowatt configuration For to with a energy in hours, products, launched version XX capacity. SunVault storage kilowatt possible energy increase up we of a our a XX%

company doubled California its battery XX% following solar SunPower storage growth, Energy year-over-year grew sales power For in enabled The rate NEM than retrofit implementation. by savings the X.X SunVault more in year-over-year the as pass category. SunVault maximum in

consistently the attach rates in above channel. California of July, in week each During were XX% SunPower direct SunVault

New defined released Reduction community's SunPower the three users, Mexico, by the single advanced seamless in enables homeowners' the and family and Pennsylvania saving population bonus mode And energy leased products under as Department all digital, the credit launched utility for states: it battery of an eligible discharge integration times. of new peak the Financials SunPower have local at a homes provides Texas, cost significant for finally, Inflation Act. Treasury SunVault with For to

nine. Please slide number turn to

As an act with ADT we announced for principle solar to with agreement been customers. this for we lessor pleased Financial share in I'm their exclusive arrived have that as the SunPower morning, to

able of benefit be borders to to excited based clean our to reach energy. the very beyond from SunPower, Americans home expand to enable are more We

this XXXX the are contributing gross and that SunPower's business. in to meaningfully financial program margins with We results begin roughly line finance in expect to existing

We financing our would arrangements partners with you look lease increase financing progress. as providing continue updates work further that capacity, to agreements these we to forward on with

interest lower the leasing tax the our of of cost equity, peers. X.X%, Our all-in stack. to rate lease than our believe the full across quarter, for this bookings continued equal sensitivity including capital to We capital better below to grow second added with strongly in be remains advantage or

to the I Before turn as like for to of role over in addition Guthrie. for the financials, it responsibilities to Dundas you, covering regular thank Guthrie Interim his thank Beth CFO Treasurer, I'd

more I'll for Beth? QX And Beth it on details to that on turn our note, over results.

Beth Eby

Thank you, Peter. XX. slide to Please turn

quarter, year-over-year. customers We added negative non-GAAP $XXX million the reporting X% of For EBITDA a increase we $X revenue, XX,XXX adjusted new and QX, million X% second an in increase are year-over-year. of of

demand interest contributed been quarter. but under growth drop was results higher of despite expected, X.X also NEM on stronger in The the California the has to lease for driven effect financing. in lower customer interest largely Slower by largely demand, rates in

in In utilities. Adjusted by California, NEM affected extended EBITDA to lower permission QX customer State by the declined times backlog quarter, operate the retrofit This of We from workloads also recognition to revenue of $X,XXX million expect higher result results EBITDA. approximately year-end. and was resulting lease recognize by all wait interconnection spread second still QX into at per for some to volume. $X over X.X the costs customer higher delayed primarily

Platform products, slower earlier corporate Peter and investment declined OpEx actions to is based market OpEx. quarter-over-quarter to and primarily mentioned conditions. levels digital match on This investment our

under share through strength as the period, is we market aim financial conditions. this continued position for gains in to company stronger maintain market Our challenging

high to the we some price quarter, XX.X% prices raise pricing quarter, in faster for million from dipped due labor. reduced than $X to an on market. of of in offset by more inventory. write-down supply expenses, pressure These margin customer amortization unusually to were increased higher and a incurred of times increased increases Separately, cost gross cycle in in materials non-GAAP million and Adjusted preinstall the $X of we charge while the our saw the ability

including We drawn recourse the debt, with to the $XXX $XXX Turning $XXX revolver. of net cash million sheet. balance million ended quarter of million of and

of end the at inventory of quarter. million the $XXX had also We

We have plans in down levels line in XXXX bring inventory place to second-half with demand.

of at in portfolio, million. in rate. our we retained to With using the discount stake now growth net value continue value X% about lease value estimate a SunStrong $XXX of renewal We ownership the our

our an $X,XXX anticipated incremental Please to customers week turn a of to to platform $XX customer last slide EBITDA adjusted of XX. new million XXXX driven We $X,XXX. by range reduced $XX to XX,XXX of adjusted guidance with EBITDA, investment XX,XXX per to million before

As installations required XX% the customer of customer projected to within in retrofit accounted for Peter the mentioned earlier, new the than second-half of more backlog midpoint are homes installation. achieve guidance our and

scale, operating with customer year to also delay million market range EBITDA experience be drive term, in match comprised the cash primarily a as to to to in support has usage to we toward and the conditions. as adjusted product, superior reduced for and this investments plan and expense prudently continues of been to years stronger plan the company we market come. per Longer growth improves. investment maintain million these financial We future customer strength growing $XX our digital, to of to operational and our corporate expect a Platform larger $XX the

call turn to Q&A, XXXX. we Before of back look over you toward want we some I considering turn review to we Peter over ahead the are for the as to factors

Peter Faricy

turn slide you, to Beth. Please Thank XX.

to typically we utility that I look for From will we the don't the guidance next want we and industry. factors analyzing rates tailwinds with are leave macro expect to you a for some at this pricing lower perspective, While point, equipment increasing as forward that we provide be year XXXX.

We Reduction under Act. forward as available rate the well stable more on tax the also interest a look to clarity environment, as credits improved Inflation bonus

the the homes on we For in at intend this backlog results keep platform XXXX long-term lower growth in should bookings as specifically, a customer we for to from we expect our an new for bonus from capacity to Reduction for with we financing to near-term financial reduced to see we levels additional year, continues financing hold and this SunPower Inflation benefit expect financing expected and and additional us growth in investment origination with SunPower partnerships large opportunities through lease we from grow to rates and tax of today will SunPower growing attach announced seek cost benefiting benefit growth lease Act, to year products, recognition the popularity sales customers with opportunities ADT. eye its add like continue XXXX, to one investment. Stronger-than-expected close credits this XXXX Financial with we the

seeing expect finally, customers. solar we to to from benefit as selling in start late Motors charger our And XXXX, Silverado General equipment and we begin financial collaboration EV with

over operator, call I'd that, turn With for questions. the like to

Operator

Sean Thank from you Please Instructions] Our much so comes first presenters. of Evercore. question line your the Morgan ask question. [Operator of

Sean Morgan

of existing to see inventory, benefit some the you as you equipment wondering cost to of just expect do some your of on the when this -- deflation some side? expect seeing was work I do we're kind start of through you of

Peter Faricy

Sean. question. morning, good for the Yes, Thanks

work we equipment expect inventory and on go We to the for primarily. our prices, reflect in as something I improvement our will QX through would And expect guide QX. that through XXXX in that

Sean Morgan

something Okay, thanks. the availability connected to And will that able system work are, to which customers digital is has functionally? of the that Like grid sort be management then does be that to how customers, be that or on limited energy going that sort the home of, access? by to to VPP anybody

Peter Faricy

question. Yes. Yes, great

a limited you're to short-term, right. customers. utilities It in we our So participate have that with program in can which is the

also both reduction then it where individual with we usage where programs. utilities VPP as OhmConnect, with sort so work And and we approach advantage this partnership a storage we have take of two-pronged directly. we battery think of of have programs And to as of

Our more connect utilities directly and that over become energy can goal of to markets is we independent the time. individual

and love opportunity our in that particular as have storage the we go to to time. that customers grid all And so that in is working the to of something an their future battery on of our would Think contribute years. we're back launch as vision on in

Sean Morgan

thanks. Beth. welcome Okay, to And

Beth Eby

Thank you.

Operator

Thank much. so you

ahead. of of question Richardson comes Scotiabank. from the Your next go line Tristan Please

Tristan Richardson

update sort about as in see, lease of, taking or Guys. leasing you you just can customer you overall the noted of give XXX% the side, comments in maybe on on Maybe market? But you of share the in bookings in the traditional just additions just overall lease the versus really the and macro. Financial. think Appreciate for sense curious guide us lease more a ‘XX loan/cash the growth do where SunPower terms

Peter Faricy

Tristan. morning, Good Yes.

as XX% said financed financed. know, a traditionally that been we this XX% would our So time, the year XX% you business was loan, XX% Of ago leased. has at cash, have

and haven't of but loan with direction headed. flipped we're that's the side other the We completely quite lease,

it XX:XX headed of probably towards maybe a run by QX lease think So lease. rate right XX:XX now of as and we're

I forward a still every loan. for We lease, really our we take and and do think for centric very meets on, financial really we because call opportunity their we offer what's looking, we to them want mentioned needs. think customer really the And almost we're that's at as we best cash what approach. important, customers

that grow see if both loans. fact as the bit little we think SunPower have vehicles, better growth the become offer than a of environment, What's to will But we a and We're in able time. loan as And lease pleased it's this footprint our ADT, go have the footprint announcement the important pleased quite our And our interest lease be that drop, with change both within economic from prepared you now, in with leases. today know business saw our acceleration of to because we're right we're that to of But value that's And interesting lot a that we'll business. be is with leases an outside you selling perspective I reflected with quite lot our rates business. capacity. opportunity lease in in more to forward. that

Tristan Richardson

then And Peter. versus discretionary investment. be ’XX corporate it, to view ‘XX? and you and talk said Appreciate like subject more product, key, digital resumption Can that platform are might those what you and into just the investments on maybe out about and critical you is

Peter Faricy

Absolutely.

you more So, you when down, you know, to in do have and these times slow economic to things less prioritize. with do have

the number experience number one, So growth. prioritizing and two are areas the profitable we're customer two

on are areas say those. The want you the would the some in year this those can we're and innovation, hardware as invest and we wanted that those so that get we would things software sense And down more everlasting to that time, new things recovers. market sustain are are to to slowing you in are those of areas are the projects make do to

compromise So but continue goal and approach, market customer a the support rational four five we're to growth we've share never is experience taking the very over last had to to our quarters. to the

Tristan Richardson

it. Peter. Appreciate Thanks,

Peter Faricy

you. Thank

Operator

question Molchanov Pavel ahead. the line next Raymond from Please comes of of James. your go And

Pavel Molchanov

[Technical of think would makes $X.XX kind sense. as a of for residential rule solar states we economic hour kilowatt Difficulty] of Historically, where taking the question. thumb useful a

sense is to, Given is give is the past changed kind or viable? that still it everything three in a the right years, that's number not of where of,

Peter Faricy

I I those doing hold an water. think numbers particular, at a were comparison, were you in just if still think look, you PV economic and taking Pavel,

our are changed include sales EV system sales think I increasing a really is what's additional that that like number batteries, of components chargers. little bit

to how with with the is but can so power important you to have power be energy. of this to how important you resiliency other of and of more how economic mix reliability will and think source and your for more the parts life. I vehicles electric to connect for be and case, a that same you of able it your also your your much is clean In it save, expensive And difference

us struggled of is to solutions harder energy a to save as that call know, you clean just to develop action this because in think Arizona challenging and providing as it year, is the we for really we've other need like solutions that But are more little struggled I more to Arizona, that's any utility in cost means The cost there, work lower where at for effective customers fact states some needs we've important customer the in there consumers. economics are money lower the meet costs state. a there

Pavel Molchanov

module the system to trajectory, lower are that downward And context, on end low, prices in back fact through on an user in all-time finally be you a fact, will that prices? that at passing the

Peter Faricy

a we business. approach a dealers value we are where take the how we want a take much their and fair to One, return utility-by-utility we our three then business our things. opportunity So Two, on fair obviously well. as state-by-state providing measure on consumer. to make return look the for what's an to we And make

the the are permit consider. if consumers. do is I and certainly an to that along think way us address it to will from cost disruption consumer. rates low prices forward, we to in products those So the lower confidence, have certainly, But we we that the as factors And interest pass addition to one lower consumer to move to the opportunity

in lower And say absolutely. we so in would I as the short-term, product prices, particular, get

again. passing the of could on percent growth us consumer count and stimulating that You to some along

Pavel Molchanov

much. very Thanks

Operator

so Thank you much.

line Shen next of your question. Philip Roth comes Your from of the Please question MKM. ask

Philip Shen

taking Thanks the for questions.

in in. volume congrats then that ’XX? you that is to one you be do how understand First could And getting us Can And could finalized? Thanks. you ADT, that that when help what on contribute on else much with expect locked guys then partnership?

Peter Faricy

States. business United come, Yes, think years mean, and ADT, team. with them new opportunity this business. we with help oldest forward and And good to got the we're we're quite of of to brand. to looking working excited. hope. Phil. great in for with many to of leader history right the popularity a they're really grow start leases, We're their safety for security. with starting their this companies help their and would who to year the I particularly solar They've to a They're I in those position have in we one Thanks, They're really leases them grow the now a know

have not XXXX. I the be a We'd it able impact for love bigger think to be expect opportunity together their to would partner material side. really small If that deal does, it on will be and go this us to impact in really I year. a loan the is to

And the I to so we're would be through that. few expect finalized the But weeks, are together. or than working no deal the two. month both next parties to next And more within interested work excited and

this think comes more I ways it partner beginning and different of to can forward as we is soon. just the together look news sharing about

Philip Shen

Thanks, Great. Peter.

Second on question sheet. here liquidity balance

the year cash. started $XXX million of You with

your currently I about $XXX tripping well? at Peter. any your Can there runway, all? burn, talk Can Is long-term covenants about debt meaningfully of at think as million. risk talk anything quarterly increased there? you Thanks, you're you

Peter Faricy

Sure. the about Beth, I from bit second-half the XXXX cash to as there? operations Well, mentioned plans want little of you improve talk in guidance, year. to revised our do do our in expect a we

Beth Eby

Sure.

So to was shares revolver of to of one some convert, we -- drew unsold address things that year, cover the where happened in big the down of the part the and the year that. repayment on a a early Enphase large we started

improving forward debt. do further receivables our sufficient From overall need plans our We've one improve a got the the in practices. big absolutely drop going place of So not to that's the we balance. inventory plan have and a for and cash liquidity in flow by standpoint, reducing reasons

Philip Shen

Beth. Welcome, guys. Thanks Great.

Beth Eby

you. Thank

Operator

much. Thank you so

of next comes ask question Piper the Kashy Your your from of Sandler. question. Harrison Please line

Kashy Harrison

Thanks for the morning. Good taking questions.

me. on Peter, the investments the during follow-up. how us supposed understand about you and correct? understand expect to investments from Did to be? a if inference So from first implying I'm for don't platform expected trying so, It like help if was adverse return XXXX. what just reduced I should just customer platform have I have sounds can And what when -- to expect an investments? I that maybe one ramifications impact thinking return you're you investments And platform you be less the platform prior rise growth

Peter Faricy

Sure.

investments, improve question two first. Day, So a help company and our to thought performance over more out we we us would platform Analyst the on platform second the your that time. tackle ways laid investments valuable At make

time, help First investments the said There were able growth how we the the industry different to grow. you as the forecasts twice to of all, industry remember varying fast platform there's to grow. was a lot us -- what of be expected we And would rate. at

And so to gain quarters our by we began grow share. to what that gain actually We said goal share it peg twice is, to at as set ago we'll and that two I And share continue continue pretty or XXXX way rate would our feel grow another say look we market to the is our has five continued. about you predict forward can't over good future, we market to but position the next market years.

EV them. ongoing an on solar with done their relationship to and our see our customer to will serve but the using not growth you of relationship that as for per and is our VPP to over relationship attract remember, and a allow we're be lifetime as more value and investments us them chargers get homeownership, this the as the be when to We panels. to able might don't proxy customers, see together second-half EBITDA panels they The buy only beyond. services innovation build of we batteries lifetime of able and one new of and per and would kind customer. And We platform to EBITDA love really

that per of us really the to second platform achieve it's So customer. $X,XXX $X,XXX adjusted That's EBITDA helping part investment. of the

Kashy Harrison

then follow-up question role. for And Beth, for That's maybe Thank my the helpful. congrats Got new it. you. on

inventory XXXX north what of perception reduce would levels environment you $XXX of Can give a dollar to basis? inventory in us on appropriate intend the of current level sense that indicated demand You’ve and currently Thank somewhere second-half of your inventories million. a you to the you. be with

Peter Faricy

various I define team days necessarily is of the define supply. don't segments, working because We'll inventory in dollars. define it for on different terms we're of terms different I have of what risk of to with and operations levels segments. it’s it in of that

individual those So of normal. about segments. neighborhood will in define we But the is the somewhere for XX-days

Kashy Harrison

you Got very Thank it. much.

Operator

so you much. Thank

Fargo. Your line of the next Michael question comes ahead. Please Wells go Blum, from

Michael Blum

you. Thank larger would saw be come storage. Good I'm attach you if larger wondering tick a customer can discuss Obviously, in think which questions rates. want outages, tag. of just about a towards ask morning, but a everyone. a I grid with up the to battery, reception would I couple nice more geared big, to you price

that's So I'm how just environment out? this playing curious in

Peter Faricy

were growth you, Michael. just to attach in and were talked pleased with think the last our as they SunVault Yes. finished In through year perspective. about attach We say, business, direct were our I give going above July. with we everyone in XX%-ish XX% rates let's rates, we quite California, we've for Thank the

there. very growth we're pleased So with the

think in I imagine battery that interesting this where you to Germany. should a without And countries It really battery panels that buy It's panels. have sense model case the forward. solar what's make every standard like California very model isn't a consumer is in soon should new. going with along solar you doesn't much economically see

Germany, more should presentations in sales customer what And you to mindset both. us, buy gearing we're, buys like operations a our of, which do our they'll operate is and so our from and sort for expect they

probably attach point, say, we into not XX%. will over with allows great you a savings. get cost have, provide lower until one the though our even one just tied doesn't only, of grid could a opportunities we tap we're being making it but to offer does to backup power, battery pleased You're rate XXX% I that I the think

exploring we're to that happen. various ways So make

explore we'll our and look that news continue on to with point third-party at But some options options soon. those. for internally more have and with We partners,

that reach think the XX% end hope really would XXs -- give opportunity the rate to an I I attach the year. us California levels. in by of in

So excited. we're quite

a beginning California has at we the second a more thought slow to bit we We a interestingly that behaved this recover enough California to work year. normal a had quarter. closer and would piece really QX think terrific want first and end piece the like the it's this I battery quarter on had We very year to state. actually is little recovery year in in it and

So, business, to be part part we as new even California of business batteries critical our going our are go larger particularly and a and think forward, I they're homes. an of in

Michael Blum

comments. those on to are was some gas in control XXXX can't rates is, macro impact, the economy, ask really the interest I control. question because can guess helpful. elements you wanted Then question appreciate XXXX, which I the prices, think which will Great. you you a natural are have commentary, et cetera, that clearly that just things your what

you what do control situation of can terms in you to your perspective? the think curious Thanks. from So

Peter Faricy

Yes.

that think the I lever that we control to the wanted important costs. our most highlight is fact we

from also We perspective. a much effective cost our have to consumers how to platform we more material costs control make value offering. the and we our give invest But the in ability have ability more

do can focus thing So think the I is really for the are going you that than through consumer? How consumer. provide for any and do the business less, important times would you with really prioritize value more growth you most you more more or on slower as and hope that do expected, you're

that that if with a need went at cost, added of money money XX of million take they million industry of job better and the they their to building estimate do net really U.S. we solar We one if today, every the Mackenzie you sure awareness data, do for of a solar save making they When households is -- Wood job look much SunPower it's to would the XX tomorrow. would need those aware how of compelling. better households save in a of

Michael Blum

much. it. Thank so you Got

Operator

Thank so much. you

ask Your Please line Stanley. Morgan Andrew next of question. comes your from question of Percoco the

Andrew Percoco

the the just guidance? quick the the I'm EBITDA in other a looking expectations customers your to but the [Technical back just year in just customer you and implied on XX,XXX guidance margin for so, expansion question Can the of of to the year. count break time, remainder or the at guidance. half you one levers meaningful pull expect Difficulty] the get to for down that

gross can Thanks. OpEx you leverage? that is break coming just from much margins down So how of and

Peter Faricy

if number Sure. year. entire the the I the customer customers of did because XX,XXX customers first-half drives we -- engine in here, of with We piece, the start the

XX,XXX XX,XXX midpoint is we'd get XX,XXX. more. The guidance Our implies to

our but So I and right this little that's think uncertain part, it on conditions, a conservative now. macroeconomic reasonable conditions more bit probably reflects market

focused improve in the more things as and drive more a made OpEx three from the I we highlighted bit cost we gross little want taken In go really improvement would perspective, we've to OpEx we margin to you do we particular, say both. on actions that Beth, about go? improvement forward. add And we're to a

Beth Eby

that don't the few of in have our quarter we things is you that this saw items in coming repeat in unusual margin gross to we quarters. one expect a last the So

and on $X install those was And working we've look normal. The down first write-downs. costs volume. we normalized little had absolutely million inventory bit million over getting the bit lower little have install amortization of and have your $X also of a $X million And inventory every we always of higher was costs about always then write volume. of We're down higher than quarter at a a inventory

those year. don't to we expect repeat So next

And then on of improve next we on normal margin to the where over expect put those focus a expansion couple significantly and do are we margin quarters. gross of top gross from

Andrew Percoco

dealer accelerator and Great. just related environment? to And changes program is maybe that. your follow-up Thanks strategy my this question how for in the

Peter Faricy

Yes. the of with pleased all, first Well, quite program. we're

to very making That Palm climates, this last a work to area. interestingly a invested I think program. progress. examples has climate serving and been in had their operations in with specialty, were kind terrific enough. of them. the they're this them Palm we deserty highlight in seeing Renova, is the with expertise them which really part that excited to We're which one hot for primarily as Arizona expand And really investment continue dealers dealers real of serving of I summer. to two Springs, they If you, just especially quite have year, Desert And strong we're into whether allowed

and imagine expand so or and and we're doubling excited in you Arizona Vincent to Nevada business, able these so team. to work with can really guys quite being And tripling their his down in

quite because excited all this about, we We also the for out about in River we as year investment Minnesota. candidate earlier talked us, a they were And made of are great Wolf But volume their incremental XXX% customer our values was that they're to previously for part for standard been SunPower, not the experience. also of high had they shares SunPower a family. company of

You take a they area, a throughout are great solar look to you Upper from company want at the ratings to have if go that to, experience. Midwest their

pleased. So quite we're

that it's tell but we're with work looking new down, for think slow to will the likely that always opportunities investments I'll new across I you our U.S. partners

And with capacity. so who have and any us that the always scouring the U.S. be don't we're we to moment, out the for if one, it. particular for planning work we'll best we find company next certainly we're in that looking at investments but And act would on

Andrew Percoco

Thank Great. you.

Operator

so you much. Thank

comes the Goldman Please Your of question from Brian next of Sachs. ahead. line go Lee

Brian Lee

those rest July, quantification? Hey, throughout give you the some in taking like. year-on-year to year, terms is It you've trying context Southeast of the mid last if versus of going looking Southeast, called that sense in Southwest. versus out line us at half everyone. at California I'm just in in look I of I with your guidance just to Southwest you sort alluded this year. being seems California get of be down the there? we’re for adds much you've give what guess improvement you could How could down like. back you're You some of ex-percent, XQ maybe high-teens Good Peter. is, if customer mentioned us give questions. in to was a of like remarks, sounds of modest the for then June, the us and couple bit But morning. it you I here Can more kind what Thanks numbers know to times prepared down seen and a plan

Peter Faricy

Yes. Thank Yes. you, Brian.

just was about talked color, X.X last changes would optimistic better question color, were try on turn see is and the not slowdown the California, had the though really really all We of for your out the I'm I right say, in of how growth will QX the terrific. qualify to answer to the areas. NEM we at year. to give pretty beginning any in be Southwest, yes, really in would rush we going It at of focused interested It more have wanted before even consumers to did power and that Southeast to California be ironically some NEM this But the end So we actually first. California, call. plan. products customer will a much for

So large we very QX with backlog. big in built a a business up

have what off as change. the the in on large a mentioned it to We drop happened I expect and at took went very certainly NEM QX previous year during we look a before,

is follows. in NEM the the So a and X.X, exactly then quarter saw. buildup from in X.X behavior off big to this that huge we final the A quarter drop

And and we most for guidance as for our QX. really in would to in happen sales QX. is interesting So what's I us baked QX and going improvement into QX a rate describe what's what moderate is now

California So at bit maybe far, so July far that or than tracking in is a for better of is little tracking in outside July. And that California that.

Brian Lee

additional And Appreciate enough. for that Beth, color. one then Fair maybe Okay. welcome.

around some You and questions comments receivable. been some the balance inventory made you around know, sheet there's and accounts

working years at positive there's flow past some capital you several don't But I the year. like, cash seen model, looks and cycle back has quite the on it haven't free half look the since, reported if the business past generate like half. least XXXX. the of dramatically changed at and So it I really a I in know basis levers. over But

we you positive would year? run rates? more will point ‘XX do free Thank you. cash get anticipate to more cash on flow So sort to going of that the free looking aggregate XQ, Or to be my are flow in I toward be positive guess, be, XQ question of

Beth Eby

XXXX. On a consistent look toward basis, more I would

pull those particularly but to work on you highlight working to as do done. to capital, still that got sure levers are some have consistently make We we've also

Brian Lee

Thank you. Fair Okay. rest I'll the for keep enough. offline.

Operator

you Thank much. so

comes Your next ask Rusch line your and Please Oppenheimer. ahead of question from of the go Colin question.

Colin Rusch

and loan combinations around of start months? seeing we six Are it new you any lease the might seeing bit impact products? you approaches you're call about any to in terms Could market XX other talk little of in financial see a the that to what next innovation

Peter Faricy

quite to quite there's all question just indifferent that think on guess some Well, do, are be but of a and lease my ecosystem a there's I power, guess, dealers still bit where I and -- still both to world not our feedback loan. transition our I would to to

think that thing the primary on. focused probably I is So we're

example, been but an but you Blue bought They leased if loan few many only terrific that history. throughout a cash Raven give we Blue -- So XX%-plus of But a has loan. they've sales, you sorry, it's Raven, its company. traditionally I know, did been --

working migrate throughout And so them their to and with closely to offer Raven whole lease loan help Blue we're business.

to SunPower the would still time, be able go So to both there'll I I and financial lease you'll think of more entities are right family you think as of it of there's see innovations basics execute of that products But potatoes the helping call There's if forward. you will. a now, still lot meat the maybe more kind of the, and and all of, on sell be part I loan.

Colin Rusch

just into as system transition you system X.X. what in terms seeing you're configuration? Are California you NEM of then Could size all? batteries, about you in smaller sizes That's talk super seeing and helpful. Thanks. at And smaller

Peter Faricy

and early It's slow. interesting. sales it's Well, Yes. are

earlier, they So system and than But little sizes battery attach they those talked XX% caveats. were but had above in NEM rates are my SunPower direct the been July. about we X.X bit larger a are two our world channel, during in

say, out, about goes. excited we're would I the business play in So quite California should again, that where

our revenue sizes that'll California. to, that, grow system attached moderate than save are for back year rate and you'll because to consumers you'll a great in to have rate have next that opportunity you'll see for for larger great think gets call it batteries continue a and exceed to business if average opportunity be growth it, single-digit and growth I think money I the I'll us customers even

Colin Rusch

Thanks so much.

Operator

Thank you so much.

comes line Kallo Baird. Please Ben the next Your go ahead. question of from of

Ben Kallo

I you Peter, know that reducing we the -- laid that you the platform out, uncertainty and Beth. in think Day. and should XXXX And of there's welcome, out back impact investment and think about out to you that but Analyst about how you have those Guys, targets there? talk how as going I targets does there, just the at know, a lot

Peter Faricy

Yes. Thanks, Ben.

XXXX and that slowing year cost exactly down that on some to for would Our this our be our lever cases reducing in is and we need pull the track costs, XXXX. goal stay to

as the current that's year guys disruption with disruption less, goal. this open year this mindset more and see and we moderate year, how XXXX XXXX. macro is business We'll ‘XX next So from a close we'll we'll we'll is It's our up the exactly we'll environment and year. and But second-half but for specific the rates pivot, that. you track do of more for on the the interest we'll prioritize get our give or Obviously, guidance out. for the plays we year

Ben Kallo

follow-up on side. just My you. the Thank is equipment

agnostic So you you'll technology about right you way. product. How that's of guess, your think do think any Do regionally that relationship more, or by, being forward? if the change you Maxeon, own with and that to with that overall we the know, have I battery allowing then going the more unique either

Peter Faricy

Yes. Ben. thank you, Yes, Thank you.

it's forward value change think prices the as go the sell companies to they Really, with we've products I those the us step they longest I back, for make had, our we is, any and a us. QX if for two and need the pleased are booking terrific Enphase, we consumer slowdown our were provide great the is dealers think signal standing came difference the of We products. to take a to partners customers. Maxeon for signal if forward. make all more that and I that We're to need and out going there's in quite provide lower of big

value to any also differentiated really our by products more consumer the only build suppliers to for ability products So provide current and our but products, decisions or of be our dealers. not for great and build the suppliers impacted much to are new going

Ben Kallo

Thank guys. Got it. you,

Operator

last of Vikram Bagri go line And ahead. much. you our Thank so question Please of Citigroup. comes the from

Vikram Bagri

attach need a on about in on capital battery outside inventory questions Good Wondering be point that higher I and to morning, which I reversed? inventory. reaccelerates need result that could may follow-up you're you item And you may that demand inventories. and wondering increase have sheet if or to working if a if you at and big rule equity was in everyone. rates, with reductions outside ticket out? wanted meaningful balance is can especially

Peter Faricy

is plan current be self-sufficient. our to Well,

free fund know, want be We success to to capital self-sufficient our of perspective, needs to own Beth our able cash want within and deliver as You our be flow. a mentioned, we business. from

leases. our great Financial other business, And capital mentioned SunPower the and I expand we for the we'll go capacity comments, to and both programs our loans partners think grow absolutely we continue forward. as business, we those of our in have part to our as part of great

things on capital together. and our from wonderful having really shareholders level. corporate free at flow But a make corporate think terrific us and about doesn't the a cash self-sustaining working perspective, outside I require board We of one Beth are the want to deliver company for is closely Beth I that

Vikram Bagri

market backlog out is It drivers you the factor also where talk a expenses, California impact year to the wanted Thank have headcount reduction. has XXXX, expense platform longer this expenses no conservative reduced is to have when profitability demand investments you weaker. as you the a because about and on you its meaningfully the happening understand and in XXXX in to demand? lower of can appears of the better the where decision on potential the be reduce will down besides the are the will are slowed XXXX? reductions follow-up, end through impact in this you And year extent share. But customer run being can, So look primarily behind you. I on that view

Peter Faricy

The quick answer would be, yes.

next to do we'd of be than be company I Wood the minus rational standpoint regardless for various And the thoughtful structure growth slower for like, future grow industry turns X% out to They're came of any probably end how results Mackenzie a can case stress for the cost able under we're think scenarios. with at good plan next we would, forecast prepared we'll at from lower have out as often a that I certainly year think growth. think strong I at is a and company perspective the years. the about level. how being But year and deliver

Our thoughtful. cost very have been reductions

our thinking so So waste? you're can cost why really can costs. where I And profitable one identify about discretionary our identify priorities the the that's always customers? customer for our as number looking future impact cost we number that talked that's reductions don't How priority is you do How how you reductions cost are go we about priority and forward. reductions two growth. now any experience, is we're And

Vikram Bagri

you. Thank

Operator

Thank you so much.

Peter Faricy

your Thank you Alright. Thank to forward we all for you. questions. you next very Yes, quarter. much seeing look

Operator

you thank call. you, Thank This concludes conference today's gentlemen. presenters, and ladies and

You now may great disconnect. a Have day.

Sunpower (SPWRQ) 1 Aug 232023 Q2 Earnings call transcript