SEC Filing | SunPower Corporation

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spwr-20220703

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34166

SunPower Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

94-3008969

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

51 Rio Robles

San Jose

California

95134

(Address of Principal Executive Offices)

(Zip Code)

(408) 240-5500

(Registrant's Telephone Number, Including Area Code)

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, $0.001 par value per share	SPWR	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The total number of outstanding shares of the registrant’s common stock as of July 29, 2022 was 174,092,855.

Table of Contents

SunPower Corporation

Form 10-Q for the quarterly period ended July 3, 2022

Table of Contents


		Page
Part I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Comprehensive Income (Loss)	5

	Condensed Consolidated Statements of Equity	6

	Condensed Consolidated Statements of Cash Flows	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	48

Part II. OTHER INFORMATION

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 6.	Exhibits	50

SIGNATURES		51

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SunPower Corporation

Condensed Consolidated Balance Sheets

(In thousands, except share par values)

(unaudited)


	July 3, 2022		January 2, 2022
Assets
Current assets:
Cash and cash equivalents	$	206,355	$	123,735
Restricted cash and cash equivalents, current portion2	1,024		691
Short-term investments	293,580		365,880
Accounts receivable, net1	149,166		121,268
Contract assets	30,358		25,994
Inventories	222,524		214,432
Advances to suppliers, current portion	2,216		462

Prepaid expenses and other current assets1	166,364		100,212
Current assets of discontinued operations1	—		120,792
Total current assets	1,071,587		1,073,466

Restricted cash and cash equivalents, net of current portion2	21,270		14,887
Property, plant and equipment, net	50,675		33,560
Operating lease right-of-use assets	28,809		31,654
Solar power systems leased, net	43,510		45,502
Goodwill	126,338		126,338


Other intangible assets, net	24,401		24,879
Other long-term assets1	169,882		156,994
Long-term assets of discontinued operations	—		47,526
Total assets	$	1,536,472	$	1,554,806

Liabilities and Equity
Current liabilities:
Accounts payable1	$	148,147	$	138,514
Accrued liabilities1	155,273		101,980
Operating lease liabilities, current portion	10,506		10,753
Contract liabilities, current portion1	102,778		62,285
Short-term debt	62,089		109,568
Convertible debt, current portion1	424,298		—
Current liabilities of discontinued operations1	—		86,496
Total current liabilities	903,091		509,596

Long-term debt	54,130		380
Convertible debt, net of current portion1	—		423,677
Operating lease liabilities, net of current portion	23,544		28,566
Contract liabilities, net of current portion	18,674		18,705
Other long-term liabilities1	117,942		141,197
Long-term liabilities of discontinued operations1	—		42,661
Total liabilities	1,117,381		1,164,782
Commitments and contingencies (Note 9)
Equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued and outstanding as of July 3, 2022 and January 2, 2022	—		—
Common stock, $0.001 par value, 367,500 shares authorized; 188,011 shares issued and 174,081 shares outstanding as of July 3, 2022; 186,452 shares issued and 173,051 shares outstanding as of January 2, 2022	174		173
Additional paid-in capital	2,840,028		2,714,500
Accumulated deficit	(2,213,195)		(2,122,212)
Accumulated other comprehensive income	11,139		11,168
Treasury stock, at cost: 13,931 shares of common stock as of July 3, 2022; 13,401 shares of common stock as of January 2, 2022	(224,829)		(215,240)
Total stockholders' equity	413,317		388,389
Noncontrolling interests in subsidiaries	5,774		1,635
Total equity	419,091		390,024
Total liabilities and equity	$	1,536,472	$	1,554,806

1 We have related-party balances for transactions made with TotalEnergies SE and its affiliates, Maxeon Solar Technologies, Ltd. (“Maxeon Solar”), and unconsolidated entities in which we have a direct equity investment. These related-party balances are recorded within the “accounts receivable, net,” “prepaid expenses and other current assets,” “other long-term assets,” “accounts payable,” “accrued liabilities,” “convertible debt, current portion,” “contract liabilities, current portion,” “convertible debt, net of current portion,” “other long-term liabilities,” “current assets of discontinued operations,” “current liabilities of discontinued operations,” and “long-term liabilities of discontinued operations” financial statement line items on our condensed consolidated balance sheets (see Note 3, Note 9, Note 10, Note 11, and Note 12).

2 Amounts included in the “Restricted cash and cash equivalents, current portion” and “Restricted cash and cash equivalents, net of current portion” financial statement line items on our condensed consolidated balance sheets include cash balances set aside for various financial obligations including loans, distributions, letter of credit facilities, and other projects’ related cash transactions.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SunPower Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Total revenues1	$	417,772	$	260,751	$	768,049	$	500,887
Total cost of revenues	336,273		200,040		614,241		394,210
Gross profit	81,499		60,711		153,808		106,677
Operating expenses:
Research and development1	7,405		4,258		12,415		8,882
Sales, general, and administrative1	93,043		49,478		170,039		91,745
Restructuring (credits) charges	(494)		808		133		4,574
(Gain) loss on sale and impairment of residential lease assets	—		(68)		—		(294)
(Gain) loss on business divestitures, net	—		(5,290)		—		(5,290)
(Income) expense from transition services agreement, net1	(494)		(1,656)		(228)		(4,743)
Total operating expenses	99,460		47,530		182,359		94,874
Operating (loss) income	(17,961)		13,181		(28,551)		11,803
Other (expense) income, net:
Interest income	92		73		134		125
Interest expense1	(5,964)		(6,630)		(11,008)		(13,657)
Other, net	(14,652)		84,075		(13,208)		39,560
Other (expense) income, net	(20,524)		77,518		(24,082)		26,028
(Loss) income from continuing operations before income taxes	(38,485)		90,699		(52,633)		37,831
(Provision for) benefits from income taxes	(3,226)		(3,594)		8,417		1,532

Net (loss) income from continuing operations	(41,711)		87,105		(44,216)		39,363
(Loss) income from discontinued operations before income taxes1	(20,857)		(13,505)		(47,155)		(15,359)
Benefits from (provision for) income taxes from discontinued operations	241		1,169		584		1,267

Net (loss) income from discontinued operations, net of taxes	(20,616)		(12,336)		(46,571)		(14,092)
Net (loss) income	(62,327)		74,769		(90,787)		25,271
Net (income) loss from continuing operations attributable to noncontrolling interests	(785)		(11)		(446)		584
Net (income) loss from discontinued operations attributable to noncontrolling interests	—		449		250		967
Net (income) loss attributable to noncontrolling interests	(785)		438		(196)		1,551
Net (loss) income from continuing operations attributable to stockholders	(42,496)		87,094		(44,662)		39,947
Net (loss) income from discontinued operations attributable to stockholders	(20,616)		(11,887)		(46,321)		(13,125)
Net (loss) income attributable to stockholders	$	(63,112)	$	75,207	$	(90,983)	$	26,822

Net (loss) income per share attributable to stockholders - basic:
Continuing operations	$	(0.24)	$	0.50	$	(0.26)	$	0.23
Discontinued operations	$	(0.12)	$	(0.07)	$	(0.27)	$	(0.08)
Net (loss) income per share – basic	$	(0.36)	$	0.43	$	(0.53)	$	0.15

Net (loss) income per share attributable to stockholders - diluted:
Continuing operations	$	(0.24)	$	0.46	$	(0.26)	$	0.23
Discontinued operations	$	(0.12)	$	(0.07)	$	(0.27)	$	(0.08)
Net (loss) income per share – diluted	$	(0.36)	$	0.39	$	(0.53)	$	0.15

Weighted-average shares:
Basic	173,951		172,640		173,664		171,920
Diluted	173,951		194,363		173,664		176,794

1 We have related-party transactions with TotalEnergies SE and its affiliates, Maxeon Solar, and unconsolidated entities in which we have a direct equity investment. These related-party transactions are recorded within the “total revenues,” “operating expenses: research and development,” “operating expenses: sales, general, and administrative,” “operating expenses: (income) expense transition services agreement, net,” “other income (expense), net: interest expense,” and “(loss) income from discontinued operations before income taxes” financial statement line items in our condensed consolidated statements of operations (see Note 3, Note 10, and Note 12).

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SunPower Corporation

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	July 3, 2022		July 4, 2021		July 3, 2022		July 4, 2021
Net (loss) income	$	(62,327)	$	74,769	$	(90,787)	$	25,271
Components of other comprehensive (loss) income:
Translation adjustment	(31)		6		(29)		4
Net change in derivatives	—		423		—		570

Benefits from (provision for) income taxes	—		63		—		16
Total other comprehensive (loss) income	(31)		492		(29)		590
Total comprehensive (loss) income	(62,358)		75,261		(90,816)		25,861
Comprehensive (income) loss attributable to noncontrolling interests	(785)		438		(196)		1,551
Comprehensive (loss) income attributable to stockholders	$	(63,143)	$	75,699	$	(91,012)	$	27,412

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

SunPower Corporation

Condensed Consolidated Statements of Equity

(In thousands)

(unaudited)


	Common Stock
	Shares	Value		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests in Subsidiaries		Total Equity
Balances at January 2, 2022	173,051	$	173	$	2,714,500	$	(215,240)	$	11,168	$	(2,122,212)	$	388,389	$	1,635	$	390,024
Net income (loss)	—	—		—		—		—		(27,871)		(27,871)		(589)		(28,460)
Other comprehensive income	—	—		—		—		2		—		2		—		2
Issuance of restricted stock to employees, net of cancellations	1,201	1		—		—		—		—		1		—		1
Stock-based compensation expense	—	—		5,427		—		—		—		5,427		—		5,427



Purchases of treasury stock	(407)	—		—		(7,333)		—		—		(7,333)		—		(7,333)


Balances at April 3, 2022	173,845	174		2,719,927		(222,573)		11,170		(2,150,083)		358,615		1,046		359,661
Net income (loss)	—	—		—		—		—		(63,112)		(63,112)		785		(62,327)
Other comprehensive income	—	—		—		—		(31)		—		(31)		—		(31)
Issuance of restricted stock to employees, net of cancellations	359	—		—		—		—		—		—		—		—
Stock-based compensation expense	—	—		7,071		—		—		—		7,071		—		7,071



Purchases of treasury stock	(123)	—		—		(2,256)		—		—		(2,256)		—		(2,256)
Income taxes impact of sale of C&I Solutions business	—	—		(1,371)		—		—		—		(1,371)		—		(1,371)
Gain on sale of C&I Solutions business1	—	—		114,401		—		—		—		114,401		3,943		118,344

Balances at July 3, 2022	174,081	$	174	$	2,840,028	$	(224,829)	$	11,139	$	(2,213,195)	$	413,317	$	5,774	$	419,091

1 As TotalEnergies Renewables is a subsidiary of TotalEnergies SE, our parent company, the sale of our C&I Solutions business was a transaction under common control. As such, total gain on sale of our C&I Solutions business was included in Additional Paid-in-Capital within our condensed consolidated statements of equity. Refer to Note 2. Discontinued Operations for further details.

Table of Contents

SunPower Corporation

Condensed Consolidated Statements of Equity

(In thousands)

(unaudited)



	Common Stock
	Shares	Value		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests in Subsidiaries		Total Equity
Balances at January 3, 2021	170,428	$	170	$	2,685,920	$	(205,476)	$	8,799	$	(2,085,246)	$	404,167	$	2,319	$	406,486
Net income (loss)	—	—		—		—		—		(48,385)		(48,385)		(1,113)		(49,498)
Other comprehensive income	—	—		—		—		98		—		98		—		98
Issuance of restricted stock to employees, net of cancellations	1,908	2		—		—		—		—		2		—		2
Stock-based compensation expense	—	—		5,437		—		—		—		5,437		—		5,437


Bond/debentures conversion	4	—		155		—		—		—		155		—		155
Purchases of treasury stock	(76)	—		—		(2,120)		—		—		(2,120)		—		(2,120)

Other adjustments	—	—		(89)		—		—		392		303		—		303
Balances at April 4, 2021	172,264	172		2,691,423		(207,596)		8,897		(2,133,239)		359,657		1,206		360,863
Net income (loss)	—	—		—		—		—		75,207		75,207		(438)		74,769
Other comprehensive income	—	—		—		—		492		—		492		—		492
Issuance of restricted stock to employees, net of cancellations	664	—		—		—		—		—		—		—		—
Issuance of common stock to executive	101	—		2,999		—		—		—		2,999		—		2,999
Stock-based compensation expense	—	—		9,225		—		—		—		9,225		—		9,225



Purchases of treasury stock	(187)	—		—		(4,310)		—		—		(4,310)		—		(4,310)
Other adjustments	—	—		—		(25)		—		—		(25)		—		(25)
Balances at July 4, 2021	172,842	$	172	$	2,703,647	$	(211,931)	$	9,389	$	(2,058,032)	$	443,245	$	768	$	444,013

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SunPower Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Six Months Ended
	July 3, 2022		July 4, 2021
Cash flows from operating activities:
Net (loss) income	$	(90,787)	$	25,271
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	17,048		5,817

Stock-based compensation	12,499		15,050
Non-cash interest expense	1,559		3,155


Loss (gain) on equity investments	13,940		(39,016)


(Gain) loss on sale of investments	—		(1,162)
(Gain) loss on business divestitures, net	—		(224)

Deferred income taxes	(11,196)		(1,637)


Other, net	949		(6,215)
Changes in operating assets and liabilities:
Accounts receivable	(37,939)		(2,909)
Contract assets	7,333		24,498
Inventories	(17,059)		1,825
Project assets	295		6,305
Prepaid expenses and other assets	(169,798)		5,180
Operating lease right-of-use assets	5,432		6,365

Advances to suppliers	(2,072)		(3,284)
Accounts payable and other accrued liabilities	46,518		(42,229)
Contract liabilities	66,273		(8,554)
Operating lease liabilities	(7,572)		(6,589)
Net cash used in operating activities	(164,577)		(18,353)
Cash flows from investing activities:
Purchases of property, plant, and equipment	(21,583)		(6,894)
Investment in software development costs	(2,725)		—
Proceeds from sale of property, plant, and equipment	—		900
Cash paid for solar power systems	—		(635)



Cash received from sale of investments	—		1,200
Proceeds from business divestitures, net of de-consolidated cash	—		10,516
Cash received from C&I Solutions sale, net of deconsolidated cash	146,303		—





Cash paid for equity investments	(16,420)		—
Proceeds from sale of equity investment	149,830		—
Proceeds from return of capital from equity investments	—		2,276
Cash paid for investments in unconsolidated investees	(3,318)		—
Net cash provided by investing activities	252,087		7,363
Cash flows from financing activities:
Proceeds from bank loans and other debt	100,276		95,396
Repayment of bank loans and other debt	(98,044)		(103,573)

Repayment of non-recourse residential and commercial financing debt	—		(9,798)


Repayment of convertible debt	—		(62,757)





Payments for financing leases	(118)		—


Issuance of common stock to executive	—		2,998

Purchases of stock for tax withholding obligations on vested restricted stock	(9,588)		(6,453)
Net cash used in financing activities	(7,474)		(84,187)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—		—
Net increase (decrease) in cash, cash equivalents, and restricted cash	80,036		(95,177)
Cash, cash equivalents, and restricted cash, beginning of period	148,613		246,804
Cash, cash equivalents, and restricted cash, end of period	$	228,649	$	151,627

Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets, including discontinued operations:
Cash and cash equivalents	$	206,355	$	140,462
Restricted cash and cash equivalents, current portion	1,024		5,818
Restricted cash and cash equivalents, net of current portion	21,270		5,347

Total cash, cash equivalents, and restricted cash	$	228,649	$	151,627

Supplemental disclosure of cash flow information:

Property, plant and equipment acquisitions funded by liabilities (including financing leases)	$	4,635	$	1,174
Right-of-use assets obtained in exchange for lease obligations	$	1,526	$	11,528
Working capital adjustment related to C&I Solutions sale	$	6,265	$