SunPower Corporation
SUNPOWER CORP (Form: 8-K, Received: 05/08/2018 16:05:38)


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 
 
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2018
 
 
SunPower Corporation
(Exact name of registrant as specified in its charter)

 
 
001-34166
(Commission File Number)
 
Delaware
94-3008969
(State or other jurisdiction
of incorporation)
(I.R.S. Employer
Identification No.)

77 Rio Robles, San Jose, California 95134
(Address of principal executive offices, with zip code)

(408) 240-5500
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 







Item 2.02.
Results of Operations and Financial Condition.

On May 8, 2018, SunPower Corporation, a Delaware corporation (the “ Company ”), issued a press release, included as Exhibit 99.1 hereto, announcing its results of operations for its first fiscal quarter ended April 1, 2018.

The information furnished in Item 2.02 and Item 9.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “ Exchange Act ”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01.
Financial Statements and Exhibits.

(d) Exhibits
 
Exhibit No.
Description
 
 
99.1
Press release dated May 8, 2018





SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
SUNPOWER CORPORATION
 
 
 
May 8, 2018
By:
/ S / CHARLES D. BOYNTON
 
Name:
Charles D. Boynton
 
Title:
Executive Vice President and
Chief Financial Officer






EXHIBIT INDEX
 
Exhibit No.
Description
 
 
99.1





Exhibit 99.1

FOR IMMEDIATE RELEASE

Contacts:

Investors
Bob Okunski
408-240-5447
Bob.Okunski@sunpower.com

Media
Natalie Wymer
408-457-2348
Natalie.Wymer@sunpower.com


SunPower Reports First Quarter Results
Company Exceeds Revenue, Margin and Adjusted EBITDA Forecasts;
Record First Quarter Performance in US Residential Business

SAN JOSE, Calif., May 8, 2018 - SunPower Corp. (NASDAQ:SPWR) today announced financial results for its first quarter ended April 1, 2018.

($ Millions, except percentages and per-share data)
1st Quarter 2018
4th Quarter 2017 3
1st Quarter 2017 3
GAAP revenue
$391.9
$651.1
$329.1
GAAP gross margin
2.6%
(2.1)%
(13.9)%
GAAP net loss
$(116.0)
$(572.7)
$(219.7)
GAAP net loss per diluted share
$(0.83)
$(4.10)
$(1.58)
Non-GAAP revenue 1
$398.9
$824.0
$429.5
Non-GAAP gross margin 1,2
6.5%
11.9%
6.5%
Non-GAAP net income (loss) 1,2
$(28.2)
$35.8
$(50.4)
Non-GAAP net income (loss) per diluted share 1,2
$(0.20)
$0.25
$(0.36)
Adjusted EBITDA 1,2
$32.3
$100.3
$8.6
Operating cash flow
$233.3
$47.9
$(126.9)
1 Information about SunPower's use of non-GAAP financial information, including a reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP Financial Measures" below.
2 Excludes polysilicon costs related to its above market polysilicon contracts.
3 The company adopted the new revenue recognition standard effective January 1, 2018. The prior periods presented here have been restated to reflect adoption of the new standard.

“Our solid execution, ability to meet project deadlines and commitment to controlling costs enabled us to exceed our forecasts across all of our business segments,” said Tom Werner, SunPower CEO and chairman of the board. “In our distributed generation business (DG), we continued to gain share in both our residential and commercial end markets as we saw strong demand throughout the quarter. In commercial, we completed and sold a number of key projects including our 7-megawatt (MW) Joint Base Anacostia-Bolling (JBAB) project as well as our 4-MW carport, rooftop and ground system for Campbell Soup. Additionally, interest in our recently launched Helix commercial storage solution remained strong as we added to our pipeline during the quarter. Demand for our high quality, industry leading residential solutions was also robust as we exceeded plan in all core markets with our U.S. residential business posting record first quarter results. In our power plant business, we executed well as we met our project milestones including the sale of our 126-MW Guajiro development project in Mexico to Atlas Renewables. Finally, we further expanded the global footprint of our SunPower Solutions (SPS) group as first quarter shipments exceeded 100 MW and we remain on plan to deploy up to 1 gigawatt (GW) in SPS this year.






“In our upstream business, we achieved our cost reduction targets and our Fabs remain at 100 percent utilization. We also continued tool installation for our first full-scale Next Generation Technology (NGT) production line at Fab 3 with first silicon expected in June and volume production planned in the fourth quarter.

“Over a year ago, we embarked on a program to transform the company through the implementation of a number of key operational and strategic initiatives. Operationally, our goal was to improve cash flow, delever the balance sheet, divest certain assets, reduce operating expenses and simplify our financial reporting. Strategically, our initiatives have focused on improving our competitive position in a challenging industry environment while structuring the company for sustained profitability. As a result, we made the decision to sell our remaining power plant development assets, expand our global equipment sales business through our SPS group and reallocate resources to our faster growing, higher margin global DG business. Additionally, we committed to investing in those areas that offer further differentiation and growth potential including our industry leading cell and panel technology, our solar-plus-storage offerings, as well as our complete solutions product suite.

“Given the strong progress of our transformation initiatives over the last 12 months, we have now turned our efforts to the next phase of our strategy: optimizing our corporate structure to further reduce costs, improve financial transparency and better position the company for sustained profitability. As a result of these efforts, we believe that a model that more closely aligns us towards an upstream and downstream business unit structure offers us significant opportunities to maximize our core strengths in manufacturing, technology and products while streamlining decision making and simplifying our financial reporting.

“Specifically, in upstream we will focus our efforts on further leveraging our proprietary back contact cell technology, including NGT, as well as the continued ramp of our unique P-Series product which we expect to reach multi-GW scale by the end of this year. Also, with the recent announcement of our planned acquisition of SolarWorld Americas, we expect to expand our U.S. manufacturing footprint, adding additional cell and module capacity to serve growing demand in North America. With a broad portfolio of high efficiency, high quality DG product offerings, we believe we can capture greater market share and superior margins in the residential and commercial segments due to our differentiated technology attributes. In relation to the downstream, we plan on increasing investment in our U.S. DG business while leveraging our SPS group to continue to meet the demand of our global power plant and DG customer base. With the DG industry forecasted to grow by 40 percent over the next five years, our extensive product portfolio, solar-plus-storage offerings and a strong global power plant and rooftop channel strategy through SPS, we believe the transition to our new business unit structure will position us to drive long term, sustained financial success for our shareholders.

“Finally, we are progressing on our corporate initiatives to delever our balance sheet. For example, the sale of our ownership stake in 8point3 Energy Partners remains on plan with the shareholder vote on the proposed transaction scheduled for May 23, 2018. Also, we expect to monetize more than 400 MW of SunPower leases that we currently hold on our balance sheet over the coming quarters. In addition, we are in the process of actively divesting our North America power plant development assets in order to focus exclusively on leveraging our SPS group for power plant equipment sales. We believe these actions, as well as others, will materially increase our liquidity, improve cash flow and simplify our financial statements,” concluded Werner.

“Our strong first quarter performance was driven by solid execution in all markets while prudently managing expenses,” said Chuck Boynton, SunPower chief financial officer. “Financially, our efforts remain focused on improving cash flow, managing our working capital and executing on our restructuring initiatives. With our asset monetization plans on track and continued cost control, we are well positioned to retire our $300 million convert in June as well as having the resources to fund our growth plans this year.”

First quarter fiscal 2018 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $87.8 million, including $1.4 million related to sale-leaseback transactions, $45.1 million related to impairment of residential lease assets, $18.7 million related to cost of above market polysilicon, $11.2 million related to restructuring expense, $8.8 million related to stock-based compensation expense, and $2.6 million related to intangibles.

Financial Outlook
The company’s second quarter GAAP guidance is as follows: revenue of $360 million to $410 million, gross margin of 2.5 percent to 4.5 percent and a net loss of $125 million to $100 million. Second quarter 2018 GAAP guidance includes the impact of revenue and timing deferrals due to sale-leaseback transactions as well as charges related to the company’s restructuring initiatives. On a non-GAAP basis, the company expects revenue of $375 million to $425 million, gross margin of 6 percent to 8 percent, Adjusted EBITDA of $10 million to $35 million and megawatts deployed in the range of 350 MW to 380 MW. Second quarter non-GAAP guidance reflects timing differences related to the revenue recognition of certain power plant projects during the quarter.






Also, the company now expects fiscal year 2018 Adjusted EBITDA to be in the range of $75 to $125 million. Fiscal year 2018 Adjusted EBITDA guidance assumes a $55 million negative impact related to tariffs associated with the section 201 trade case as well as a reduction of approximately $50 million of non-controlling interest income resulting from the anticipated sale of the company’s lease portfolio in the second half of the year. On a comparative basis under the same assumptions, the company expects 10 to 15 percent year-over-year growth in 2018 Adjusted EBITDA.

The company will host a conference call for investors this afternoon to discuss its first quarter 2018 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower’s website at http://investors.sunpower.com/events.cfm .

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its first quarter 2018 performance on the Events and Presentations section of SunPower’s Investor Relations page at http://investors.sunpower.com/events.cfm . The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.

About SunPower
As one of the world's most innovative and sustainable energy companies, SunPower Corporation (NASDAQ:SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools and utilities around the globe rely on SunPower's more than 30 years of proven experience. From the first flip of the switch, SunPower delivers maximum value and superb performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, North and South America. For more information about how SunPower is changing the way our world is powered, visit www.sunpower.com .

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) expectations regarding demand and project and order pipelines; (b) our plans and expectations regarding manufacturing expansion, production goals, product focus and production ramps, and cost reduction efforts; (c) our strategic goals and plans, and our ability to achieve them; (d) our plans to optimize our corporate structure, reduce and control costs, improve financial transparency, maximize our core strengths, position our company for sustained profitability, streamline decision making, and the impact of these initiatives on our financial performance; (e) our expectations and plans regarding product focus, growth and market share, profitability, margins, and financial performance in each of our business lines; (f) our plans expansion of our U.S. distributed generation and SunPower Solutions business lines, and our ability to meet global demand; (g) our plans to invest in technologies and strategic initiatives and allocate resources; (h) our plans to align into upstream and downstream business units, and the financial impacts of such plans; (i) our expectations regarding our restructuring plan and associated initiatives, including plans to delever our balance sheet and complete planned divestiture transactions, and the impact of these initiatives on our liquidity, financial performance, cash flow, and operating expenses; (j) our ability to successfully complete key strategic transactions, including the sale of our remaining power plant development assets, the sale of our interest in 8point3 Partners, our planned monetization of our lease portfolio and associated accounting charges, and our expectations regarding the timing and proceeds of such transactions, and their impact on our liquidity, cash flow, and financial statements; (k) our plans and expectations with respect to acquisition and expansion activities, including the planned SolarWorld Americas acquisition; (l) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (m) our ability to retire our 2018 convertible bonds, and fund our planned growth initiatives; (n) our expectations for the solar industry and the markets we serve, including market conditions, tariff and associated impacts, demand and focus, and long-term prospects; (o) our second quarter fiscal 2018 guidance, including GAAP revenue, gross margin, and net loss, as well as non-GAAP revenue, gross margin, Adjusted EBITDA, and MW deployed, including related assumptions; and (p) fiscal year 2018 guidance, Adjusted EBITDA, including related assumptions and projected year over year growth. These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) changes in public policy, including the imposition and applicability of tariffs pursuant to the Section 201 trade action and the process for exemptions; (4) regulatory changes and the availability of economic incentives promoting use of solar energy; (5) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (6) fluctuations in our operating results; (7) appropriately sizing our manufacturing capacity and containing manufacturing and logistics difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges executing on our HoldCo and YieldCo strategies, including the risk that we may not be able to successfully monetize our interest in 8point3 Energy Partners; and (12) our ability to successfully implement actions to meet our cost reduction targets, reduce capital expenditures, and implement our restructuring plan and associated initiatives, including plans to sell projects, monetize assets, and streamline our business and focus.  A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.”  Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

©2018 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, EQUINOX and HELIX are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.
.







SUNPOWER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


 
April 1, 2018
 
December 31, 2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
260,672

 
$
435,097

Restricted cash and cash equivalents, current portion
34,667

 
43,709

Accounts receivable, net
190,795

 
204,966

Contract assets
58,636

 
35,074

Inventories
354,611

 
352,829

Advances to suppliers, current portion
93,744

 
30,689

Project assets - plants and land, current portion
72,767

 
103,063

Prepaid expenses and other current assets
139,071

 
146,209

Total current assets
1,204,963

 
1,351,636

 
 
 
 
Restricted cash and cash equivalents, net of current portion
67,230

 
65,531

Restricted long-term marketable securities
5,959

 
6,238

Property, plant and equipment, net
1,137,083

 
1,147,845

Solar power systems leased and to be leased, net
377,012

 
369,218

Advances to suppliers, net of current portion
117,096

 
185,299

Long-term financing receivables, net
341,619

 
330,672

Goodwill and other intangible assets, net
23,512

 
25,519

Other long-term assets
508,249

 
546,698

Total assets
$
3,782,723

 
$
4,028,656

 
 
 
 
Liabilities and Equity
 
 
 

Current liabilities:
 
 
 

Accounts payable
$
334,201

 
$
406,902

Accrued liabilities
184,846

 
229,208

Contract liabilities, current portion
86,226

 
104,286

Short-term debt
59,583

 
58,131

Convertible debt, current portion
299,875

 
299,685

Total current liabilities
964,731

 
1,098,212

 
 
 
 
Long-term debt
431,655

 
430,634

Convertible debt
816,930

 
816,454

Contract liabilities, net of current portion
156,510

 
171,610

Other long-term liabilities
817,540

 
804,122

Total liabilities
3,187,366

 
3,321,032

 
 
 
 
Redeemable noncontrolling interests in subsidiaries
14,105

 
15,236

 
 
 
 
Equity:
 
 
 

Preferred stock

 






Common stock
141

 
140

Additional paid-in capital
2,449,907

 
2,442,513

Accumulated deficit
(1,785,927
)
 
(1,669,897
)
Accumulated other comprehensive loss
(897
)
 
(3,008
)
Treasury stock, at cost
(186,065
)
 
(181,539
)
Total stockholders' equity
477,159

 
588,209

Noncontrolling interests in subsidiaries
104,093

 
104,179

Total equity
581,252

 
692,388

Total liabilities and equity
$
3,782,723

 
$
4,028,656







SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data )
(Unaudited)
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
Revenue:
 
 
 
 
 
 
Residential
 
$
169,432

 
$
174,322

 
$
134,694

Commercial
 
123,336

 
144,003

 
105,446

Power Plant
 
99,120

 
332,809

 
88,955

Total revenue
 
391,888

 
651,134

 
329,095

Cost of revenue:
 
 
 
 
 
 
Residential
 
141,390

 
164,817

 
119,920

Commercial
 
118,023

 
171,221

 
105,600

Power Plant
 
122,227

 
328,689

 
149,159

Total cost of revenue
 
381,640

 
664,727

 
374,679

Gross profit (loss)
 
10,248

 
(13,593
)
 
(45,584
)
Operating expenses:
 
 
 
 
 
 
Research and development
 
18,891

 
19,823

 
20,515

Selling, general and administrative
 
65,130

 
72,526

 
67,403

Restructuring charges
 
11,177

 
2,769

 
9,790

Impairment of residential lease assets
 
49,092

 
624,335

 

Total operating expenses
 
144,290

 
719,453

 
97,708

Operating loss
 
(134,042
)
 
(733,046
)
 
(143,292
)
Other income (expense), net:
 
 
 
 
 
 
Interest income
 
529

 
139

 
938

Interest expense
 
(25,106
)
 
(24,851
)
 
(20,902
)
Other, net
 
15,794

 
1,468

 
(74,088
)
Other expense, net
 
(8,783
)
 
(23,244
)
 
(94,052
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(142,825
)
 
(756,290
)
 
(237,344
)
Benefit from (provision for) income taxes
 
(2,628
)
 
2,870

 
(2,031
)
Equity in earnings (loss) of unconsolidated investees
 
(2,144
)
 
(146
)
 
2,488

Net loss
 
(147,597
)
 
(753,566
)
 
(236,887
)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
 
31,623

 
180,915

 
17,161

Net loss attributable to stockholders
 
$
(115,974
)
 
$
(572,651
)
 
$
(219,726
)

Net loss per share attributable to stockholders:
 
 
 
 
 
 
- Basic
 
$
(0.83
)
 
$
(4.10
)
 
$
(1.58
)
- Diluted
 
$
(0.83
)
 
$
(4.10
)
 
$
(1.58
)
Weighted-average shares:
 
 
 
 
 
 
- Basic
 
140,212

 
139,613

 
138,902

- Diluted
 
140,212

 
139,613

 
138,902






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
Net loss
 
$
(147,597
)
 
$
(753,566
)
 
$
(236,887
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
39,833

 
54,291

 
41,247

Stock-based compensation
 
7,053

 
9,294

 
7,375

Non-cash interest expense
 
4,443

 
5,837

 
2,958

Impairment of equity method investment
 

 
7,993

 
72,964

Dividend from 8point3 Energy Partners LP
 
5,399

 
7,859

 
7,192

Equity in loss of unconsolidated investees
 
2,144

 
146

 
(2,488
)
Gain on sale of equity method investment
 
(15,576
)
 
(5,346
)
 

Deferred income taxes
 
(344
)
 
(8,541
)
 
227

Impairment of residential lease assets
 
49,092

 
624,335

 

Other, net
 
972

 
(3,881
)
 
4,777

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
Accounts receivable
 
13,924

 
(40,469
)
 
50,651

Contract assets
 
(23,561
)
 
7,104

 
12,401

Inventories
 
(34,195
)
 
28,776

 
(40,004
)
Project assets
 
20,484

 
71,536

 
32,260

Prepaid expenses and other assets
 
10,885

 
14,103

 
33,264

Long-term financing receivables, net
 
(38,114
)
 
(32,308
)
 
(30,584
)
Advances to suppliers
 
5,149

 
16,075

 
13,701

Accounts payable and other accrued liabilities
 
(100,156
)
 
4,281

 
(198,909
)
Contract liabilities
 
(33,097
)
 
40,373

 
102,962

Net cash provided by (used in) operating activities
 
(233,262
)
 
47,892

 
(126,893
)
Cash flows from investing activities:
 
 
 
 
 
 
Purchases of property, plant and equipment
 
(8,859
)
 
(12,177
)
 
(27,877
)
Cash paid for solar power systems, leased and to be leased
 
(23,787
)
 
(22,007
)
 
(18,217
)
Cash paid for solar power systems
 
(2,604
)
 
(88,306
)
 
(4,605
)
Dividend from 8point3 Energy Partners LP
 
2,694

 

 

Dividend from equity method investees
 

 
882

 

Proceeds from sale of equity method investment
 
27,282

 
5,954

 

Cash paid for investments in unconsolidated investees
 
(6,349
)
 
(2,680
)
 
(10,142
)
Net cash used in investing activities
 
(11,623
)
 
(118,334
)
 
(60,841
)
Cash flows from financing activities:
 
 
 
 
 
 
Proceeds from bank loans and other debt
 
49,794

 
56,104

 
110,763

Repayment of bank loans and other debt
 
(51,052
)
 
(54,755
)
 
(129,027
)
Proceeds from issuance of non-recourse residential financing, net of issuance costs
 
32,687

 
6,435

 
20,580






Repayment of non-recourse residential financing
 
(3,781
)
 
(2,133
)
 
(1,298
)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
36,726

 
55,591

 
49,030

Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects
 
(5,422
)
 
(5,200
)
 
(3,763
)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs
 
9,104

 
209,222

 
121,818

Repayment of non-recourse power plant and commercial financing
 
(890
)
 
(27,463
)
 
(28,964
)
Purchases of stock for tax withholding obligations on vested restricted stock
 
(4,526
)
 
(366
)
 
(4,062
)
Net cash provided by financing activities
 
62,640

 
237,435

 
135,077

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents
 
477

 
(609
)
 
788

Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(181,768
)
 
166,384

 
(51,869
)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
544,337

 
377,953

 
514,212

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
362,569

 
$
544,337

 
$
462,343

 
 
 
 
 
 
 
Non-cash transactions:
 
 
 
 
 
 
Costs of solar power systems, leased and to be leased, sourced from existing inventory
 
$
14,354

 
$
15,296

 
$
13,389

Costs of solar power systems, leased and to be leased, funded by liabilities
 
$
5,835

 
$
5,527

 
$
3,169

Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets
 
$
9,791

 
$
44,490

 
$
52,917

Property, plant and equipment acquisitions funded by liabilities
 
$
12,768

 
$
15,706

 
$
44,966

Contractual obligations satisfied with inventory
 
$
17,517

 
$
14,820

 
$

Assumption of debt by buyer upon sale of equity interest
 
$
27,321

 
$

 
$

Assumption of debt by buyer upon sale of projects
 
$

 
$
196,104

 
$






Impact to Previously Reported Results

Adoption of ASC 606 impacted our previously reported results as follows:

SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data )
(Unaudited)
 
 
Three Months Ended December 31, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Revenue:
 
 
 
 
 
 
Residential
 
$
175,652

 
$
(1,330
)
 
$
174,322

Commercial
 
147,559

 
(3,556
)
 
144,003

Power Plant
 
334,889

 
(2,080
)
 
332,809

Total revenue
 
658,100

 
(6,966
)
 
651,134

Cost of revenue:
 
 
 
 
 
 
Residential
 
165,683

 
(866
)
 
164,817

Commercial
 
174,948

 
(3,727
)
 
171,221

Power Plant
 
332,701

 
(4,012
)
 
328,689

Total cost of revenue
 
673,332

 
(8,605
)
 
664,727

Gross profit (loss)
 
(15,232
)
 
1,639

 
(13,593
)
Operating loss
 
(734,685
)
 
1,639

 
(733,046
)
Other expense, net
 
(16,179
)
 
(7,065
)
 
(23,244
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(750,864
)
 
(5,426
)
 
(756,290
)
Equity in earnings of unconsolidated investees
 
(1,598
)
 
1,452

 
(146
)
Net loss
 
(749,592
)
 
(3,974
)
 
(753,566
)
Net loss attributable to stockholders
 
$
(568,677
)
 
$
(3,974
)
 
$
(572,651
)
 
 
 
 
 
 
 
Net loss per share attributable to stockholders:
 
 
 
 
 
 
- Basic
 
$
(4.07
)
 
$
(0.03
)
 
$
(4.10
)
- Diluted
 
$
(4.07
)
 
$
(0.03
)
 
$
(4.10
)






 
 
Three Months Ended October 1, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Revenue:
 
 
 
 
 
 
Residential
 
$
153,258

 
$
(1,345
)
 
$
151,913

Commercial
 
106,005

 
8,407

 
114,412

Power Plant
 
217,928

 
1,583

 
219,511

Total revenue
 
477,191

 
8,645

 
485,836

Cost of revenue:
 
 
 
 
 
 
Residential
 
126,614

 
(867
)
 
125,747

Commercial
 
99,988

 
6,718

 
106,706

Power Plant
 
234,931

 
(2,837
)
 
232,094

Total cost of revenue
 
461,533

 
3,014

 
464,547

Gross profit
 
15,658

 
5,631

 
21,289

Operating loss
 
(76,953
)
 
5,631

 
(71,322
)
Other expense, net
 
(22,668
)
 
936

 
(21,732
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(99,621
)
 
6,567

 
(93,054
)
Equity in earnings of unconsolidated investees
 
15,308

 
1,451

 
16,759

Net loss
 
(78,856
)
 
8,018

 
(70,838
)
Net loss attributable to stockholders
 
$
(54,247
)
 
$
8,018

 
$
(46,229
)
 
 
 
 
 
 
 
Net loss per share attributable to stockholders:
 
 
 
 
 
 
- Basic
 
$
(0.39
)
 
$
0.06

 
$
(0.33
)
- Diluted
 
$
(0.39
)
 
$
0.06

 
$
(0.33
)










 
 
Three Months Ended July 2, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Revenue:
 
 
 
 
 
 
Residential
 
$
157,125

 
$
(1,319
)
 
$
155,806

Commercial
 
100,105

 
(8,279
)
 
91,826

Power Plant
 
80,216

 
133

 
80,349

Total revenue
 
337,446

 
(9,465
)
 
327,981

Cost of revenue:
 
 
 
 
 
 
Residential
 
130,987

 
(844
)
 
130,143

Commercial
 
97,530

 
(8,914
)
 
88,616

Power Plant
 
93,694

 
(639
)
 
93,055

Total cost of revenue
 
322,211

 
(10,397
)
 
311,814

Gross profit
 
15,235

 
932

 
16,167

Operating loss
 
(78,191
)
 
932

 
(77,259
)
Other expense, net
 
(37,727
)
 
925

 
(36,802
)
Loss before income taxes and equity in earnings of unconsolidated investees
 
(115,918
)
 
1,857

 
(114,061
)
Equity in earnings of unconsolidated investees
 
5,449

 
1,388

 
6,837

Net loss
 
(112,822
)
 
3,245

 
(109,577
)
Net loss attributable to stockholders
 
$
(93,760
)
 
$
3,245

 
$
(90,515
)
 
 
 
 
 
 
 
Net loss per share attributable to stockholders:
 
 
 
 
 
 
- Basic
 
$
(0.67
)
 
$
0.02

 
$
(0.65
)
- Diluted
 
$
(0.67
)
 
$
0.02

 
$
(0.65
)






SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
Three Months Ended December 31, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Net loss
 
$
(749,592
)
 
$
(3,974
)
 
$
(753,566
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
55,157

 
(866
)
 
54,291

Impairment of equity method investment
 

 
7,993

 
7,993

Equity in loss (earnings) of unconsolidated investees
 
1,598

 
(1,452
)
 
146

Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
Accounts receivable
 
(35,234
)
 
(5,235
)
 
(40,469
)
Costs and estimated earnings in excess of billings
 
1,026

 
(1,026
)
 

Contract assets
 

 
7,104

 
7,104

Project assets
 
81,177

 
(9,641
)
 
71,536

Prepaid expenses and other assets
 
8,240

 
5,863

 
14,103

Long-term financing receivables, net
 
(32,343
)
 
35

 
(32,308
)
Accounts payable and other accrued liabilities
 
36,272

 
(31,991
)
 
4,281

Billings in excess of costs and estimated earnings
 
270

 
(270
)
 

Customer advances
 
6,913

 
(6,913
)
 

Contract liabilities
 

 
40,373

 
40,373

Net cash provided by operating activities
 
47,892

 

 
47,892

Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents
 
166,384

 

 
166,384

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
377,953

 

 
377,953

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
544,337

 
$

 
$
544,337







 
 
Three Months Ended October 1, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Net loss
 
$
(78,856
)
 
$
8,018

 
$
(70,838
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
46,188

 
(868
)
 
45,320

Equity in earnings of unconsolidated investees
 
(15,308
)
 
(1,451
)
 
(16,759
)
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
Accounts receivable
 
10,331

 
1,465

 
11,796

Costs and estimated earnings in excess of billings
 
394

 
(394
)
 

Contract assets
 

 
(6,625
)
 
(6,625
)
Project assets
 
(2,194
)
 
6,748

 
4,554

Prepaid expenses and other assets
 
11,525

 
(463
)
 
11,062

Long-term financing receivables, net
 
(28,984
)
 
23

 
(28,961
)
Accounts payable and other accrued liabilities
 
(20,495
)
 
(6,523
)
 
(27,018
)
Billings in excess of costs and estimated earnings
 
(3,269
)
 
3,269

 

Customer advances
 
1,556

 
(1,556
)
 

Contract liabilities
 

 
(1,643
)
 
(1,643
)
Net cash used in operating activities
 
(26,612
)
 

 
(26,612
)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(23,070
)
 

 
(23,070
)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
401,023

 

 
401,023

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
377,953

 
$

 
$
377,953







 
 
Three Months Ended July 2, 2017
 
 
As Reported
 
Adoption of ASC 606
 
As Adjusted
Net loss
 
$
(112,822
)
 
$
3,245

 
$
(109,577
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
 
Depreciation and amortization
 
45,269

 
(845
)
 
44,424

Equity in earnings of unconsolidated investees
 
(5,449
)
 
(1,387
)
 
(6,836
)
Changes in operating assets and liabilities, net of effect of acquisitions:
 
 
 
 
 
 
Accounts receivable
 
(27,224
)
 
4,055

 
(23,169
)
Costs and estimated earnings in excess of billings
 
1,859

 
(1,859
)
 

Contract assets
 

 
(2,220
)
 
(2,220
)
Project assets
 
(97,022
)
 
(8,935
)
 
(105,957
)
Prepaid expenses and other assets
 
53,852

 
(1,751
)
 
52,101

Long-term financing receivables, net
 
(31,872
)
 
51

 
(31,821
)
Accounts payable and other accrued liabilities
 
(9,754
)
 
15,050

 
5,296

Billings in excess of costs and estimated earnings
 
(4,411
)
 
4,411

 

Customer advances
 
13,294

 
(13,294
)
 

Contract liabilities
 

 
3,479

 
3,479

Net cash used in operating activities
 
(161,799
)
 

 
(161,799
)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents
 
(61,320
)
 

 
(61,320
)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period
 
462,343

 

 
462,343

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period
 
$
401,023

 
$

 
$
401,023











Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross profit/margin; net income (loss); net income (loss) per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provides investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analyses. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; the non-GAAP measures should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP revenue includes adjustments relating to 8point3, utility and power plant projects, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross profit/margin includes adjustments relating to impairment of residential lease assets, cost of above-market polysilicon, stock-based compensation, amortization of intangible assets, depreciation of idle equipment, and non-cash interest expense, each as described below. In addition to those same adjustments, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share are adjusted for adjustments relating to restructuring expense, IPO-related costs, the tax effect of these non-GAAP adjustments, and other items, each as described below. In addition to the same adjustments as non-GAAP net income (loss), Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for (benefit from) income taxes, and depreciation.


Non-GAAP Adjustments Based on International Financial Reporting Standards (“IFRS”)

The company’s non-GAAP results include adjustments to recognize revenue and profit under IFRS that are consistent with the adjustments made in connection with the company’s reporting process as part of its status as a consolidated subsidiary of Total S.A., a foreign public registrant which reports under IFRS. Differences between GAAP and IFRS reflected in the company’s non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company’s revenue and profit generation performance, and assists in aligning the perspectives of our management and noncontrolling shareholders with those of Total S.A., our controlling shareholder.

8point3. In 2015, 8point3 Energy Partners LP ("8point3 Energy Partners"), a joint YieldCo vehicle, was formed by the company and First Solar, Inc. ("First Solar" and, together with the company, the "Sponsors") to own, operate and acquire solar energy generation assets. Class A shares of 8point3 Energy Partners are now listed on the NASDAQ Global Select Market under the trading symbol “CAFD.” Immediately after the IPO, the company contributed a portfolio of 170 MW of its solar generation assets (the “SPWR Projects”) to 8point3 Operating Company, LLC ("OpCo"), 8point3 Energy Partners' primary operating subsidiary. In exchange for the SPWR Projects, the company received cash proceeds as well as equity interests in several 8point3 Energy Partners affiliated entities: primarily common and subordinated units representing a 40.7% (since reduced to 36.5% via a secondary issuance of shares in fiscal 2016) stake in OpCo and a 50.0% economic and management stake in 8point3 Holding Company, LLC (“Holdings”), the parent company of the general partner of 8point3 Energy Partners and the owner of incentive distribution rights in OpCo. Holdings, OpCo, 8point3 Energy Partners and their respective subsidiaries are referred to herein as the “8point3 Group” or “8point3.”






The company includes adjustments related to the sales of projects contributed to 8point3 previously based on the difference between the fair market value of the consideration received and the net carrying value of the projects contributed, of which, a portion is deferred in proportion to the company’s retained equity stake in 8point3. Prior to the adoption of ASC 606, these sales are recognized under either real estate, lease, or consolidation accounting guidance depending upon the nature of the individual asset contributed, with outcomes ranging from no, partial, or full profit recognition. The company adopted ASC 606 on January 1, 2018, using the full retrospective method, which required the company to restate each prior period presented. The company recorded a material amount of deferred profit associated with projects sold to 8point3 in 2015, the majority of which had previously been deferred under real estate accounting. Accordingly, the company's carrying value in the 8point3 materially increased upon adoption which required the company to evaluate its investment in 8point3 for other-than-temporary impairment ("OTTI"). In accordance with such evaluation, the company recognized a non-cash impairment charge on the 8point3 investment balance in the prior periods that were affected.

Utility and power plant projects. The company includes adjustments related to the revenue recognition of certain utility and power plant projects based the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations and, when relevant, the allocation of revenue and margin to the company’s project development efforts at the time of initial project sale. Prior to the adoption of ASC 606, such projects are accounted for under real estate accounting guidance, under which no separate allocation to the company’s project development efforts occurs and the amount of revenue and margin that is recognized may be limited in circumstances where the company has certain forms of continuing involvement in the project. Under ASC 606, such projects are accounted for when the customer obtains control of the promised goods or services which generally results in earlier recognition of revenue and profit than previous GAAP. Over the life of each project, cumulative revenue and gross profit will eventually be equivalent under both ASC 606 and non-GAAP once these projects are completed.

Sale-leaseback transactions. The company includes adjustments primarily related to the revenue recognition on certain sale-leaseback transactions based on the net proceeds received from the buyer-lessor. Under GAAP, these transactions are accounted for under the financing method in accordance with real estate accounting guidance. Under such guidance, no revenue or profit is recognized at the inception of the transaction, and the net proceeds from the buyer-lessor are recorded as a financing liability. Imputed interest is recorded on the liability equal to the company’s incremental borrowing rate adjusted solely to prevent negative amortization.

Other Non-GAAP Adjustments

Impairment of residential lease assets. In fiscal 2017, the company made the decision to sell its interest in the residential lease portfolio and as a result of this triggering event, determined it was necessary to evaluate the potential for impairment in its ability to recover the carrying amount of the residential lease portfolio. In accordance with such evaluation, the company recognized a non-cash impairment charge on its solar power systems leased and to be leased and an allowance for losses related financing receivables. In connection with the impairment loss, the carrying values of its solar power systems leased and to be leased were reduced which resulted in lower depreciation charges. Management believes that it is appropriate to exclude the impact of residential lease assets impairment and its corresponding depreciation savings from the company's non-GAAP financial measures as they are not reflective of ongoing operating results and do not contribute to a meaningful evaluation of a company's past operating performance.

Cost of above-market polysilicon. The company has entered in previous years into multiple long-term, fixed-price supply agreements to purchase polysilicon for periods of up to 10 years. The prices in these supply agreements, which incorporate a cash portion and a non-cash portion attributable to the amortization of prepayments made under the agreements, significantly exceed market prices. Additionally, in order to reduce inventory and improve working capital, the Company has periodically elected to sell polysilicon inventory in the marketplace at prices below the Company’s purchase price, thereby incurring a loss.





Management believes that it is appropriate to exclude the impact of its above-market cost of polysilicon, including the effect of above-market polysilicon on product costs, losses incurred on sales of polysilicon to third parties, and inventory reserves and project asset impairments from the company's non-GAAP financial measures as they are not reflective of ongoing operating results and do not contribute to a meaningful evaluation of a company's past operating performance.

Stock-based compensation. Stock-based compensation relates primarily to the company’s equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. Management believes that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including compared with the performance of other companies, without the period-to-period variability created by stock-based compensation.

Amortization of intangible assets. The company incurs amortization of intangible assets as a result of acquisitions, which includes patents, purchased technology, project pipeline assets, and in-process research and development. Management believes that it is appropriate to exclude these amortization charges from the company’s non-GAAP financial measures as they arise from prior acquisitions, are not reflective of ongoing operating results, and do not contribute to a meaningful evaluation of a company’s past operating performance.

Depreciation of idle equipment. In the fourth quarter of 2017, the company changed the deployment plan for its next generation of solar cell technology, which made certain then temporarily idle equipment obsolete, and therefore, retired that affected equipment. Such asset depreciation is excluded from the company's non-GAAP financial measures as it is non-cash in nature and not reflective of ongoing operating results. Excluding this data provides investors with a basis to compare the company's performance against the performance of other companies without such charges.

Non-cash interest expense. The company incurs non-cash interest expense related to the amortization of items such as original issuance discounts on its debt. The company excludes non-cash interest expense because the expense does not reflect its financial results in the period incurred. Management believes that this adjustment for non-cash interest expense provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without non-cash interest expense.

Restructuring expense. The company incurs restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company’s global strategy and improving its overall operating efficiency and cost structure. Restructuring charges are excluded from non-GAAP financial measures because they are not considered core operating activities and such costs have historically occurred infrequently. Although the company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges from the company's non-GAAP financial measures as they are not reflective of ongoing operating results or contribute to a meaningful evaluation of a company's past operating performance.

IPO-related costs. Costs incurred related to the IPO of 8point3 included legal, accounting, advisory, valuation, and other expenses, as well as modifications to or terminations of certain existing financing structures in preparation for the sale to 8point3. As these costs are non-recurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.

Other. The company combines amounts previously disclosed under separate captions into “Other” when amounts do not have a significant impact on the presented fiscal periods. Management believes that these adjustments provide investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.






Tax effect. This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. The company's non-GAAP tax amount is based on estimated cash tax expense and reserves. The company forecasts its annual cash tax liability and allocates the tax to each quarter in a manner generally consistent with its GAAP methodology. This approach is designed to enhance investors’ ability to understand the impact of the company's tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense.

Adjusted EBITDA adjustments. When calculating Adjusted EBITDA, in addition to adjustments described above, the company excludes the impact during the period of the following items:

Cash interest expense, net of interest income
Provision for (benefit from) income taxes
Depreciation

Management presents this non-GAAP financial measure to enable investors to evaluate the company's performance, including compared with the performance of other companies.

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.






SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)

Adjustments to Revenue:  
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
GAAP revenue
 
$
391,888

 
$
651,134

 
$
329,095

Adjustments based on IFRS:
 
 
 
 
 
 
8point3
 

 
(114
)
 
5,518

Utility and power plant projects
 
(2,043
)
 
9,138

 
41,396

Sale-leaseback transactions
 
9,103

 
163,837

 
53,478

Non-GAAP revenue
 
$
398,948

 
$
823,995

 
$
429,487


Adjustments to Gross Profit / Margin:  
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
GAAP gross profit
 
$
10,248

 
$
(13,593
)
 
$
(45,584
)
Adjustments based on IFRS:
 
 
 
 
 
 
8point3
 

 
(62
)
 
324

Utility and power plant projects
 
(268
)
 
(3,538
)
 
42,691

Sale-leaseback transactions
 
(3,039
)
 
25,839

 
(3,144
)
Other adjustments:
 
 
 
 
 
 
Impairment of residential lease assets
 
(3,853
)
 

 

Cost of above-market polysilicon
 
18,700

 
81,804

 
29,815

Stock-based compensation expense
 
1,057

 
2,783

 
1,184

Amortization of intangible assets
 
2,492

 
2,505

 
2,567

Depreciation of idle equipment
 
721

 
2,300

 

Non-cash interest expense
 

 
2

 
10

Non-GAAP gross profit
 
$
26,058

 
$
98,040

 
$
27,863

 
 
 
 
 
 
 
GAAP gross margin (%)
 
2.6
%
 
(2.1
)%
 
(13.9
)%
Non-GAAP gross margin (%)
 
6.5
%
 
11.9
 %
 
6.5
 %






















Adjustments to Net income (loss):  
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
GAAP net loss attributable to stockholders
 
$
(115,974
)
 
$
(572,651
)
 
$
(219,726
)
Adjustments based on IFRS:
 
 
 
 
 
 
8point3
 
(177
)
 
8,130

 
77,698

Utility and power plant projects
 
(268
)
 
(3,538
)
 
42,691

Sale-leaseback transactions
 
1,373

 
28,491

 
(1,709
)
Other adjustments:
 
 
 
 
 
 
Impairment of residential lease assets
 
45,139

 
473,709

 

Cost of above-market polysilicon
 
18,700

 
81,804

 
29,815

Stock-based compensation expense
 
8,758

 
9,294

 
7,375

Amortization of intangible assets
 
2,492

 
8,769

 
3,026

Depreciation of idle equipment
 
721

 
2,300

 

Non-cash interest expense
 
22

 
25

 
35

Restructuring expense
 
11,177

 
2,769

 
9,790

IPO-related costs
 

 

 
114

Tax effect
 
(170
)
 
(3,338
)
 
513

Non-GAAP net income (loss) attributable to stockholders
 
$
(28,207
)
 
$
35,764

 
$
(50,378
)






Adjustments to Net income (loss) per diluted share:
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
Net income (loss) per diluted share
 
 
 
 
 
 
Numerator:
 
 
 
 
 
 
GAAP net loss available to common stockholders 1
 
$
(115,974
)
 
$
(572,651
)
 
$
(219,726
)
Non-GAAP net income (loss) available to common stockholders 1
 
$
(28,207
)
 
$
35,764

 
$
(50,378
)
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
GAAP weighted-average shares
 
140,212

 
139,613

 
138,902

Effect of dilutive securities:
 
 
 
 
 
 
Stock options
 

 

 

Restricted stock units
 

 
1,570

 

Upfront Warrants (held by Total)
 

 
49

 

Warrants (under the CSO2015)
 

 

 

0.75% debentures due 2018
 

 

 

Non-GAAP weighted-average shares 1
 
140,212

 
141,232

 
138,902

 
 
 
 
 
 
 
GAAP net loss per diluted share
 
$
(0.83
)
 
$
(4.10
)
 
$
(1.58
)
Non-GAAP net income (loss) per diluted share
 
$
(0.20
)
 
$
0.25

 
$
(0.36
)
1  
In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 0.75%, 0.875% and 4.0% debentures if the debentures are considered converted in the calculation of net income (loss) per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the debenture under the if-converted method is excluded from the calculation of non-GAAP net income (loss) per diluted share.







Adjusted EBITDA:
 
 
THREE MONTHS ENDED
 
 
April 1, 2018
 
December 31, 2017
 
April 2, 2017
GAAP net loss attributable to stockholders
 
$
(115,974
)
 
$
(572,651
)
 
$
(219,726
)
Adjustments based on IFRS:
 
 
 
 
 
 
8point3
 
(177
)
 
8,130

 
77,698

Utility and power plant projects
 
(268
)
 
(3,538
)
 
42,691

Sale-leaseback transactions
 
1,373

 
28,491

 
(1,709
)
Other adjustments:
 
 
 
 
 
 
Impairment of residential lease assets
 
45,139

 
473,709

 

Cost of above-market polysilicon
 
18,700

 
81,804

 
29,815

Stock-based compensation expense
 
8,758

 
9,294

 
7,375

Amortization of intangible assets
 
2,492

 
8,769

 
3,026

Depreciation of idle equipment
 
721

 
2,300

 

Non-cash interest expense
 
22

 
25

 
35

Restructuring expense
 
11,177

 
2,769

 
9,790

IPO-related costs
 

 

 
114

Cash interest expense, net of interest income
 
20,165

 
22,058

 
18,529

Provision for (benefit from) income taxes
 
2,628

 
(2,870
)
 
2,031

Depreciation
 
37,576

 
41,960

 
38,932

Adjusted EBITDA
 
$
32,332

 
$
100,250

 
$
8,601










Q1 2018 and FY 2018 GUIDANCE
(in thousands except percentages)
Q2 2018
FY 2018
Revenue (GAAP)
$360,000-$410,000
$1,600,000-$2,000,000
Revenue (non-GAAP) 1
$375,000-425,000
$1,800,000-$2,200,000
Gross margin (GAAP)
2.5%-4.5%
N/A
Gross margin (non-GAAP) 2
6%-8%
N/A
Net loss (GAAP)
$100,000-$125,000
$370,000-$420,000
Adjusted EBITDA 3
$10,000-$35,000
$75,000-$125,000


1.
Estimated non-GAAP amounts above for Q2 2018 include net adjustments that increase (decrease) revenue by approximately $22 million related to sale-leaseback transactions, $(5) million related to 8point3 and $(2) million related to utility and power plant projects. Estimated non-GAAP amounts above for fiscal 2018 include net adjustments that increase revenue by approximately $200 million related to sale-leaseback transactions.

2.
Estimated non-GAAP amounts above for Q2 2018 include net adjustments that increase (decrease) gross margin by approximately $2 million related to sale-leaseback transactions, $(5) million related to 8point3, $(2) million related to utility and power plant projects, $19 million related to cost of above-market polysilicon, $3 million related to stock-based compensation expense, and $1 million related to amortization of intangible assets.

3.
Estimated Adjusted EBITDA amounts above for Q2 2018 include net adjustments that decrease (increase) net loss by approximately $58 million related to impairment of lease assets, $2 million related to sale-leaseback transactions, $(24) million related to 8point3, $(2) million related to utility and power plant projects, $19 million related to cost of above-market polysilicon, $8 million related to stock-based compensation expense, $3 million related to amortization of intangible assets, $7 million related to restructuring, $26 million related to interest expense, $2 million related to income taxes, and $36 million related to depreciation. Estimated non-GAAP amounts above for fiscal 2018 include net adjustments that decrease (increase) net loss by approximately $107 million related to impairment of lease assets, $20 million related to sale-leaseback transactions, $(24) million related to 8point3, $(9) million related to utility and power plant projects, $96 million related to cost of above-market polysilicon, $34 million related to stock-based compensation expense, $12 million related to amortization of intangible assets, $31 million related to restructuring, $83 million related to interest expense, $16 million related to income taxes, and $129 million related to depreciation.









SUPPLEMENTAL DATA
(In thousands, except percentages)

The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross profit/margin, net income (loss) and net income (loss) per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.

THREE MONTHS ENDED
 
April 1, 2018
 
 
 
 
Revenue
 
Gross Profit / Margin
 
Operating expenses
 
Other
income
(expense),
net
 
Benefit
from
(provision
for)
income
taxes
 
Equity in earnings of unconsolidated investees
 
Gain (Loss) attributable to non-controlling interests
 
Net income (loss) attributable to stockholders
 
Residential
 
Commercial
 
Power Plant
 
Residential
 
Commercial
 
Power Plant
 
Research
and
development
 
Selling,
general
and
administrative
 
Restructuring
charges
 
GAAP
$
169,432

 
$
123,336

 
$
99,120

 
$
28,042

 
16.6
%
 
$
5,313

 
4.3
%
 
$
(23,107
)
 
(23.3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(115,974
)
Adjustments based on IFRS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8point3

 

 

 

 
 
 

 
 
 

 
 
 

 

 

 

 

 
(177
)
 

 
(177
)
Utility and power plant projects

 
(643
)
 
(1,400
)
 

 
 
 
(450
)
 
 
 
182

 
 
 

 

 

 

 

 

 

 
(268
)
Sale-leaseback transactions

 
9,103

 

 

 
 
 
(2,920
)
 
 
 
(119
)
 
 
 

 

 

 
4,412

 

 

 

 
1,373

Other adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Impairment of residential lease assets