SunPower Begins 2020 on a High, with Profitable Quarter and 2019

SunPower is not out of the woods yet on financial pains
associated with its restructuring and updated business plan, but
the company logged a profitable Q4 — its
second that year
— and an overall positive 2019.

Those results offer tailwinds as the company continues to spin
out its foreign manufacturing business, which will become a
separate company called
Maxeon Solar Technologies
, and cope with challenges in its
commercial division.

“We entered 2019 with the goal of fundamentally transforming
our business while improving financial performance,” said CEO Tom
Werner on a Wednesday earnings call. By the end of the year,
SunPower indeed was slated to look quite different — solely
focused on delivering distributed solar-and-storage — and
it ended in the black, with Q4 2019 net income at $5.4 million
and full-year 2019 income at $22.2 million.

SunPower projects those financial gains won’t last into the
new year, with Q1 2020 net losses forecasted at $85 million to $70
million. But Werner said he expects the company to maintain
profitability beyond the current quarter after it tightens up snags
in its commercial business.

“If we could just get commercial to break-even, we’re going
to have a meaningful profitable new SunPower that continues to be
profitable,” Werner told GTM after the earnings calls.

The company offered 2020 guidance of GAAP revenue between $2.1
and $2.3 billion and between 2.5 and 2.75
gigawatts shipped.

Commercial stumbles

Though SunPower was awarded over $500 million in commercial
projects in 2019 and registered 75 percent year-over-year volume
growth in distributed generation, indicating strength on project
origination, the company hit stumbling blocks on bringing
commercial projects to the finish line.

“[In] the fourth quarter we had excellent bookings and awards
… What’s not working great is perfecting the projects and
executing on them,” said Werner on the earnings call. “We had
an unusual number of projects that were delayed by virtue of
permits and interconnection issues.”

That ate up money. But Werner said the company has made changes
in the last month to reduce its exposure to those delays, including
restructuring contracts to reduce liability, moving more projects
to external engineering, procurement and construction partners and
integrating its own development and execution teams.

Werner believes those moves will be enough to get its commercial
segment back on track in Q2 of this year.

“I have strong reasons to believe it will be fixed,” he
said, adding that overall commercial demand is increasing.

“The market, by the way, ironically is very favorable towards
commercial. There’s a big appetite to buy commercial projects.
So, there are some positive aspects in commercial, that being buyer
appetite and storage,” Werner told GTM.

The company’s commercial storage pipeline now exceeds 175
megawatts and attachment rates for its Helix system have reached 35
percent and 60 percent in California. In Q4, the company booked its
largest-ever storage project, 20-megawatt hours to complement a
solar installation at a Chevron oilfield.

Residential Strength

SunPower’s dealer network of more than 500 “was really
hitting on all cylinders in Q4,” said Werner. The business hit
record residential quarterly bookings at 137 megawatts — 27
megawatts above Q4 2018 — and added 12,000 residential
customers.

That, along with SunPower’s upstream business, helped soften
the impact of less-than-stellar performance on the commercial side.
 

“That shows you how great the other two businesses
performed,” Werner told GTM.

Because of the seasonality of residential bookings, that
business won’t be able to entirely buoy the commercial business
as SunPower continues to rehab it in early 2020. The imbalance
should be short-lived, according to Werner.  

“The residential business is going to be profitable this
quarter, but it is seasonal so it can’t offset what we’re
projecting to be another weak quarter in commercial,” said
Werner. “We do expect commercial to get better in Q2.”

SunPower anticipates moving its Equinox residential storage
system beyond beta and towards wider sales in Q2. Because of
increasing confidence in customer demand, the company expects to
reach attach rates north of 20 percent by Q4.

Maxeon soon to be gone

SunPower announced in November that it would split off its panel
manufacturing business, with SunPower’s former head of
Technologies Jeff Waters helming the company.  

The two entities are still working towards their official
division, which they project will close in the second quarter of
2020. The timeline will be partially determined by antitrust
approvals in various countries of operation. They’re also working
to raise debt to match the infusion of $298 million in equity
capital offered by China’s Tianjin Zhonghuan Semiconductor, which
will go to Maxeon as it sets off as an independent company.

Maxeon’s shipments were up across the globe in 2019 — it
generates the majority of its revenue outside the U.S. Looking
ahead, the group noted a major focus on the APAC region, which saw
a 151 percent increase in shipments year-over-year.

As part of the split, SunPower announced layoffs impacting about

3 percent of its workforce
. Werner said impacted employees
would work through Q3 2020. Some will move on to Maxeon.

Source: FS – GreenTech Media
SunPower Begins 2020 on a High, with Profitable Quarter and 2019