SunPower Reports Fourth Quarter and FY 2017 Results
SAN JOSE, Calif., Feb. 14, 2018 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its fourth quarter ended December 31, 2017.
($ Millions,
except
percentages and
per-share data) 4th Quarter 3rd Quarter 4th Quarter
2017 2017 2016 FY 2017 FY 2016
--- ---- ---- ---- ------- -------
GAAP revenue $658.1 $477.2 $1,024.9 $1,871.8 $2,559.6
------------ ------ ------ -------- -------- --------
GAAP gross margin (2.3%) 3.3% (3.1%) (0.8%) 7.4%
----------------- ----- --- ----- ----- ---
GAAP net loss ($568.7) ($54.2) ($275.1) ($851.2) ($471.1)
------------- ------- ------ ------- ------- -------
GAAP net loss per
diluted share ($4.07) ($0.39) ($1.99) ($6.11) ($3.41)
----------------- ------ ------ ------ ------ ------
Non-GAAP
revenue(1) $824.0 $533.6 $1,097.3 $2,128.6 $2,702.9
----------- ------ ------ -------- -------- --------
Non-GAAP gross
margin1,2 11.9% 12.8% 6.4% 11.1% 14.5%
-------------- ---- ---- --- ---- ----
Non-GAAP net
income (loss)1,2 $35.8 $29.5 $3.3 ($34.4) $85.0
----------------- ----- ----- ---- ------ -----
Non-GAAP net
income (loss)
per diluted
share1,2 $0.25 $0.21 $0.02 ($0.25) $0.60
-------------- ----- ----- ----- ------ -----
Adjusted
EBITDA1,2 $100.3 $67.3 $71.4 $189.7 $311.9
---------- ------ ----- ----- ------ ------
Operating cash
flow $47.9 ($26.6) $486.1 ($267.4) ($312.3)
-------------- ----- ------ ------ ------- -------
(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 above market
polysilicon contracts.
"We are pleased with our results for the quarter, which were the product of solid execution across all business segments," said Tom Werner, SunPower president and CEO. "In our distributed generation business, demand remained strong through the end of the year, enabling SunPower to gain share in both our residential and commercial segments. Our solid performance in commercial reflected the completion of a number of key projects including the 28-megawatt (MW) Vandenberg Air Force project while expanding our footprint in storage and booking of our first Helix storage project. Demand for our high quality, industry leading residential solutions remained robust as we exceeded plan in all core markets. For the full year, our residential MW deployments grew more than 25 percent, reinforcing our market leadership position in this segment. In our power plant business, we completed and sold the 110-MW El Pelicano project in Chile in the fourth quarter generating significant cash and delevering the balance sheet. We are seeing continued growth in our SunPower Solutions group as well, including the recent award of 115 MW of rooftop projects in the latest French tender.
"In our upstream business, we are on track to achieve our long-term cost reduction targets and our Fabs remain at 100 percent utilization. We are particularly pleased with the progress of our next generation solar cell and module technology and are proceeding with installation of the first full-scale Next Generation Technology (NGT) manufacturing line at Fab 3 with volume production planned in the second half of this year.
"We executed well against our 2017 strategic goals, significantly improving cash flow, continuing our restructuring efforts and reducing operating expenses. In our power plant business, we remain focused on transitioning from project development to equipment supply through our SunPower Solutions group in order to improve capital investment returns as well as reduce SunPower's risk profile. We are also continuing with our plans to identify and monetize assets as evidenced by our recent announcement on the proposed sale of our ownership stake in 8point3 Energy Partners. Additionally, we expect to monetize more than 400 MW of SunPower leases that we currently hold on our balance sheet. Combined, both of these actions will materially improve our liquidity, delever our balance sheet and simplify our financial statements. Also, we will utilize these additional resources to further invest in our core growth initiatives including our next generation cell and panel technology, our digital platform, energy storage and our distributed generation business.
"In relation to the 201 solar tariff decision, the product exclusion process was published today. We will continue to work through this process with the Administration to convey that only SunPower can make a copper-plated, interdigitated back contact solar cells and that with an exclusion, SunPower can further invest in research and development to improve on its market-leading efficiency and performance while demonstrating America's continuing leadership in solar energy innovation. Unfortunately, we are already seeing a negative near-term impact from the ruling as the increased costs due to import tariffs have delayed certain 2018 projects and made other projects uneconomical. We have also put our planned $20 million U.S. employment expansion on hold and are considering other significant cost saving initiatives to lower our overall expense structure and improve our financial performance. Given the early stages of this review, we are not prepared to discuss specific actions at this time but expect to communicate our plans on or before our next earnings call. Our focus has been, and will continue to be, on driving cash flow, strengthening our balance sheet and positioning the company for sustained profitability."
"Our solid project execution in all market segments and prudent management of expenses enabled us to achieve our fourth quarter goals," said Chuck Boynton, SunPower chief financial officer. "Financially, we benefitted from our restructuring efforts as operating expenses declined more than 20 percent year over year. We posted positive cash flow for the quarter and exited the year with more than $450 million in cash, ahead of our forecasts. With our current liquidity, the pending sale of our ownership position in 8point3 and the expected monetization of approximately 400 MW of lease assets later this year, we are confident we will have the resources available to retire our $300 million convertible bond in June and fund areas of growth in 2018."
As mentioned above, the company, in accordance with its announced strategic review, made the decision in the fourth quarter to monetize its interests in its high-quality lease portfolio. The company currently holds approximately 400 MW of leases with more than 45,000 customers representing more than $1.4 billion of long-term receivables. This decision, which is expected to generate at least $200 million in proceeds, in line with the company's efforts to improve its liquidity. While the lease assets are performing at, or better than our expectations, due to our decision to monetize and deconsolidate the portfolio, the company determined it was necessary to evaluate the potential for impairment in its ability to recover the carrying amount of its lease portfolio on a discounted cash flow basis. In accordance with such evaluation, the company recorded a $474 million non-cash GAAP charge driven primarily by the difference of lease accounting treatment and the applied discount rate for lease assets that would be held to maturity versus the rate applied to the sale of assets before maturity. The company expects to incur additional charges in the first quarter as it adds leases through the close of the proposed transaction. SunPower believes that this transaction will drive significant cash proceeds, a reduction in invested capital as well as a more transparent presentation of its financial statements.
Fourth quarter fiscal 2017 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $604.4 million, including $28.4 million related to sale-leaseback transactions, $473.7 million related to impairment of residential lease assets, $81.8 million related to cost of above market polysilicon, $9.3 million related to stock-based compensation expense, $8.8 million related to intangibles, and $2.4 million of other non-GAAP adjustments.
Financial Outlook
The company's first quarter GAAP guidance is as follows: revenue of $280 million to $330 million, gross margin of (2.5) percent to (0.5) percent and a net loss of $110 million to $90 million. First quarter 2018 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to sale-leaseback transactions as well as the impact of charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $300 million to $350 million, gross margin of 4 percent to 6 percent, Adjusted EBITDA of $5 million to $25 million and megawatts deployed in the range of 275 MW to 305 MW.
Fiscal year 2018 guidance includes the anticipated impact of the recent 201 decision and is as follows. The company expects revenue of $1.6 billion to $2.0 billion on a GAAP basis and $1.8 billion to $2.2 billion on a non-GAAP basis, gigawatts (GW) deployed in the range of 1.5 GW to 1.9 GW, non-GAAP operational expenses of less than $290 million, capital expenditures of approximately $100 million and positive EBITDA for the year.
The company will host a conference call for investors this afternoon to discuss its fourth quarter 2017 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 fourth quarter 2017 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) our expectations and plans regarding growth and market share, profitability, investment returns, risk profile, and financial performance in each of our business lines; (b) our expectations regarding our cost reduction efforts, product and manufacturing expansion plans, and production goals; (c) our strategic goals and plans, and our ability to achieve them; (d) our ability to successfully complete key strategic transactions, including the sale of our interest in 8point3 Partners, our planned monetization of our lease portfolio and associated accounting charges, and our expectations regarding the proceeds of such transactions; (e) our expectations regarding our restructuring plan and associated initiatives, including plans to shift our focus, simplify our business model and financials, and identify and monetize non-core assets, and the impact of these initiatives on our liquidity, financial performance, cash flow, and operating expenses; (f) our plans to invest in technologies and strategic initiatives and allocate resources; (g) the impact of tariffs imposed pursuant to the Section 201 trade action on our business, our expectations for the product exclusion process, and our response plans and their anticipated effectiveness; (h) our plans for hiring, expansion, and cost savings initiatives, and the expected financial impact and timing thereof; (i) our positioning for future success, long-term competitiveness, and our ability to return to sustained profitability; (j) our ability to retire our 2018 convertible bonds, strengthen our balance sheet, complete planned project sales, deleverage our balance sheet, and generate additional cash proceeds to fund our planned growth initiatives; (k) our expectations for the solar industry and the markets we serve, including market conditions, tariff and associated impacts, and long-term prospects; (l) our first 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; and (m) fiscal year 2018 guidance, including GAAP and non-GAAP revenue, GW deployed, operational expenditures, capital expenditures, and Adjusted EBITDA. 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) challenges inherent in constructing certain of our large projects; (6) 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; (7) fluctuations in our operating results; (8) appropriately sizing our manufacturing capacity and containing manufacturing and logistics difficulties that could arise; (9) challenges managing our joint ventures and partnerships; (10) 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; (11) fluctuations or declines in the performance of our solar panels and other products and solutions; 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)
Dec. 31, Jan. 1,
2017 2017
---- ----
Assets
Current assets:
Cash and cash
equivalents $435,097 $425,309
Restricted cash and
cash equivalents,
current portion 43,709 33,657
Accounts receivable,
net 215,479 219,638
Costs and estimated
earnings in excess
of billings 18,203 32,780
Inventories 352,829 401,707
Advances to
suppliers, current
portion 30,689 111,479
Project assets -
plants and land,
current portion 103,063 374,459
Prepaid expenses and
other current
assets 152,444 315,670
------- -------
Total current assets 1,351,513 1,914,699
Restricted cash and
cash equivalents,
net of current
portion 65,531 55,246
Restricted long-
term marketable
securities 6,238 4,971
Property, plant and
equipment, net 1,148,042 1,027,066
Solar power systems
leased and to be
leased, net 428,149 621,267
Project assets -
plants and land,
net of current
portion - 33,571
Advances to
suppliers, net of
current portion 185,299 173,277
Long-term financing
receivables, net 338,877 507,333
Goodwill and other
intangible assets,
net 25,519 44,218
Other long-term
assets 80,146 185,519
Total assets $3,629,314 $4,567,167
========== ==========
Liabilities and Equity
Current liabilities:
Accounts payable $406,902 $540,295
Accrued liabilities 267,760 391,226
Billings in excess
of costs and
estimated earnings 8,708 77,140
Short-term debt 58,131 71,376
Convertible debt,
current portion 299,685 -
Customer advances,
current portion 54,999 10,138
------ ------
Total current
liabilities 1,096,185 1,090,175
Long-term debt 430,634 451,243
Convertible debt 816,454 1,113,478
Customer advances,
net of current
portion 69,062 298
Other long-term
liabilities 954,646 721,032
Total liabilities 3,366,981 3,376,226
--------- ---------
Redeemable
noncontrolling
interests in
subsidiaries 15,236 103,621
Equity:
Preferred stock - -
Common stock 140 139
Additional paid-in
capital 2,442,513 2,410,395
Accumulated deficit (2,115,188) (1,218,681)
Accumulated other
comprehensive loss (3,008) (7,238)
Treasury stock, at
cost (181,539) (176,783)
-------- --------
Total stockholders'
equity 142,918 1,007,832
Noncontrolling
interests in
subsidiaries 104,179 79,488
Total equity 247,097 1,087,320
------- ---------
Total liabilities
and equity $3,629,314 $4,567,167
========== ==========
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
Revenue:
Residential $175,652 $153,258 $220,464 $622,066 $720,331
Commercial 147,559 106,005 146,874 461,932 436,915
Power Plant 334,889 217,928 657,551 787,815 1,402,316
------- ------- ------- ------- ---------
Total revenue 658,100 477,191 1,024,889 1,871,813 2,559,562
Cost of revenue:
Residential 165,683 126,614 207,604 544,041 603,559
Commercial 174,948 99,988 171,344 483,095 438,711
Power Plant 332,701 234,931 678,014 859,948 1,327,326
------- ------- ------- ------- ---------
Total cost of revenue 673,332 461,533 1,056,962 1,887,084 2,369,596
Gross margin (15,232) 15,658 (32,073) (15,271) 189,966
Operating expenses:
Research and development 19,823 20,693 23,860 80,785 116,130
Selling, general and administrative 72,526 68,401 66,517 277,033 329,061
Restructuring charges 2,769 3,517 175,774 21,045 207,189
Impairment of residential lease
assets 624,335 - - 624,335 -
------- --- --- ------- ---
Total operating expenses 719,453 92,611 266,151 1,003,198 652,380
------- ------ ------- --------- -------
Operating loss (734,685) (76,953) (298,224) (1,018,469) (462,414)
Other income (expense), net:
Interest income 139 636 519 2,100 2,652
Interest expense (24,717) (21,898) (18,091) (89,754) (60,735)
Gain on settlement of preexisting
relationships in connection with
acquisition - - - - 203,252
Loss on equity method investment in
connection with acquisition - - - - (90,946)
Goodwill impairment - - - - (147,365)
Other, net 8,399 (1,406) 8,184 (10,941) (9,039)
-------
Other expense, net (16,179) (22,668) (9,388) (98,595) (102,181)
------- ------- ------ ------- --------
Loss before income taxes and equity
in earnings of unconsolidated
investees (750,864) (99,621) (307,612) (1,117,064) (564,595)
Benefit from (provision for) income
taxes 2,870 5,457 9,559 3,943 (7,319)
Equity in earnings of
unconsolidated investees (1,598) 15,308 3,714 20,211 28,070
------ ------ ----- ------ ------
Net loss (749,592) (78,856) (294,339) (1,092,910) (543,844)
Net loss attributable to
noncontrolling interests and
redeemable noncontrolling
interests 180,915 24,609 19,221 241,747 72,780
------ ------- ------
Net loss attributable to
stockholders $(568,677) $(54,247) $(275,118) $(851,163) $(471,064)
========= ======== ========= ========= =========
Net loss per share attributable to
stockholders:
- Basic $(4.07) $(0.39) $(1.99) $(6.11) $(3.41)
- Diluted $(4.07) $(0.39) $(1.99) $(6.11) $(3.41)
Weighted-average shares:
- Basic 139,613 139,517 138,442 139,370 137,985
- Diluted 139,613 139,517 138,442 139,370 137,985
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
Cash flows from operating activities:
Net loss $(749,592) $(78,856) $(294,339) $(1,092,910) $(543,844)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 55,157 46,188 51,367 188,698 174,209
Stock-based compensation 9,294 9,399 12,596 34,674 61,498
Non-cash interest expense 5,837 4,818 94 18,390 1,057
Non-cash restructuring charges - - 148,791 - 166,717
Gain on settlement of preexisting relationships in connection with acquisition - - - - (203,252)
Impairment of equity method investment - - - 8,607 90,946
Goodwill impairment - - - - 147,365
Dividend from 8point3 Energy Partners LP 7,859 7,631 6,949 30,091 6,949
Equity in earnings of unconsolidated investees 1,598 (15,308) (3,714) (20,211) (28,070)
Gain on sale of equity method investment (5,346) - - (5,346) -
Excess tax benefit from stock-based compensation - - (1,588) - (2,810)
Deferred income taxes (8,541) 290 (9,402) (6,966) (6,611)
Impairment of residential lease assets 624,335 - - 624,335 -
Other, net (3,881) 1,020 988 1,299 4,793
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable (35,234) 10,331 3,097 (458) (33,466)
Costs and estimated earnings in excess of billings 1,026 394 (7,381) 14,577 6,198
Inventories 28,776 9,432 30,698 (38,236) (70,448)
Project assets 81,177 (2,194) 467,893 19,153 33,248
Prepaid expenses and other assets 8,240 11,525 (20,535) 158,868 48,758
Long-term financing receivables, net (32,343) (28,984) (35,999) (123,842) (172,542)
Advances to suppliers 16,075 19,910 29,338 68,767 74,341
Accounts payable and other accrued liabilities 36,272 (20,495) 132,056 (192,096) (12,146)
Billings in excess of costs and estimated earnings 270 (3,269) (22,325) (68,432) (38,204)
Customer advances 6,913 1,556 (2,529) 113,626 (16,969)
Net cash provided by (used in) operating activities 47,892 (26,612) 486,055 (267,412) (312,283)
------ ------- ------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (12,177) (12,491) (37,619) (69,791) (187,094)
Cash paid for solar power systems, leased and to be leased (22,007) (23,504) (19,872) (86,539) (84,289)
Cash paid for solar power systems (88,306) (30,230) (36,464) (126,548) (38,746)
Proceeds from sales or maturities marketable securities - - - - 6,210
Payments to 8point3 Energy Partners LP attributable to real estate projects and residential lease portfolio - - - - (9,838)
Purchases of marketable securities - (1,306) (4,955) (1,306) (4,955)
Cash paid for acquisitions, net of cash acquired - - - - (24,003)
Dividend from equity method investee 882 1,470 - 3,773 -
Cash received for sale of investment in joint ventures and non-public companies 5,954 - - 5,954 -
Cash paid for investments in unconsolidated investees (2,680) (4,344) (501) (18,627) (11,547)
Cash paid for intangibles - - (521) - (521)
Net cash used in investing activities (118,334) (70,405) (99,932) (293,084) (354,783)
-------- ------- ------- -------- --------
Cash flows from financing activities:
Cash paid for acquisitions - - (5,714) - (5,714)
Proceeds from bank loans and other debt 56,104 81,749 113,645 339,253 113,645
Repayment of bank loans and other debt (54,755) (74,622) (128,029) (358,317) (143,601)
Proceeds from issuance of non-recourse residential financing, net of issuance costs 6,435 52,535 41,128 89,612 183,990
Repayment of non-recourse residential financing (2,133) (1,731) (1,225) (6,888) (37,932)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects 55,591 44,412 54,611 196,628 146,334
Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects (5,200) (4,574) (5,620) (18,228) (19,039)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs 209,222 92,014 136,536 527,897 738,822
Repayment of non-recourse power plant and commercial financing (27,463) (116,585) (537,671) (176,069) (795,209)
Contributions from noncontrolling interests attributable to power plant and commercial projects - 800 - 800 -
Excess tax benefit from stock-based compensation - - (1,222) - -
Purchases of stock for tax withholding obligations on vested restricted stock (366) (175) (564) (4,756) (21,517)
Net cash provided by (used in) financing activities 237,435 73,823 (334,125) 589,932 159,779
------- ------ -------- ------- -------
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents (609) 124 (745) 689 735
---- --- ---- --- ---
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 166,384 (23,070) 51,253 30,125 (506,552)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 377,953 401,023 462,959 514,212 1,020,764
------- ------- ------- ------- ---------
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $544,337 $377,953 $514,212 $544,337 $514,212
======== ======== ======== ======== ========
Non-cash transactions:
Assignment of residential lease receivables to third parties $39 $65 $568 $129 $4,290
Costs of solar power systems, leased and to be leased, sourced from existing inventory $15,296 $14,925 $13,439 $57,688 $57,422
Costs of solar power systems, leased and to be leased, funded by liabilities $5,527 $5,298 $3,026 $5,527 $3,026
Costs of solar power systems under sale-leaseback financing arrangements, sourced from project assets $44,490 $10,266 $20,596 $110,375 $27,971
Property, plant and equipment acquisitions funded by liabilities $15,706 $32,367 $43,817 $15,706 $43,817
Net reclassification of cash proceeds offset by project assets in connection with the deconsolidation of assets sold to the 8point3 Group $ - $445 $2,274 $4,918 $45,862
Exchange of receivables for an investment in an unconsolidated investee $ - $ - $ - $ - $2,890
Contractual obligations satisfied with inventory $14,820 $13,187 $ - $34,675 $ -
Assumption of debt by buyer upon sale of project $196,104 $ - $ - $196,104 $ -
Acquisition funded by liabilities $ - $ - $103,354 $ - $103,354
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, the sale of operating lease assets, and sale-leaseback transactions, each as described below. In addition to those same adjustments, Non-GAAP gross profit/margin includes adjustments relating to cost of above-market polysilicon, stock-based compensation, amortization of intangible assets, depreciation of idle equipment, non-cash interest expense, and arbitration ruling, 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 impairment of residential lease assets, goodwill impairment, 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%
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 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. The deferred profit is subsequently recognized over time. With certain exceptions such as for projects already in operation, the company's revenue is equal to the fair market value of the consideration received, and cost of goods sold is equal to the net carrying value plus a partial deferral of profit proportionate with the retained equity stake. Under GAAP, 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. IFRS profit, less deferrals associated with retained equity, is recognized for sales related to the residential lease portfolio. Revenue recognition for other projects sold to 8point3 is deferred until these projects reach commercial operations. Equity in earnings of unconsolidated investees also includes the impact of the company's share of 8point3's earnings related to sales of projects receiving sales recognition under IFRS but not GAAP.
-- Utility and power plant projects. The company includes adjustments
related to the revenue recognition of certain utility and power plant
projects based on percentage-of-completion accounting and, when
relevant, the allocation of revenue and margin to the company's project
development efforts at the time of initial project sale. Under GAAP,
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. Over the life of each project,
cumulative revenue and gross margin will eventually be equivalent under
both GAAP and IFRS; however, revenue and gross margin will generally be
recognized earlier under IFRS. Within each project, the relationship
between the adjustments to revenue and gross margins is generally
consistent. However, as the company may have multiple utility and power
plant projects in differing stages of progress at any given time, the
relationship in the aggregate will occasionally appear otherwise.
-- Sale of operating lease assets. The company includes adjustments related
to the revenue recognition on the sale of certain solar assets subject
to an operating lease (or of solar assets that are leased by or intended
to be leased by the third-party purchaser to another party) based on the
net proceeds received from the purchaser. Under GAAP, these sales are
accounted for as borrowing transactions in accordance with lease
accounting guidance. Under such guidance, revenue and profit recognition
is based on rental payments made by the end lessee, and the net proceeds
from the purchaser are recorded as a non-recourse borrowing liability,
with imputed interest expense recorded on the liability. This treatment
continues until the company has transferred the substantial risks of
ownership, as defined by lease accounting guidance, to the purchaser, at
which point the sale is recognized.
-- 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. Management believes that it is
appropriate to exclude the impact of residential lease assets impairment
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
impairment 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.
-- Goodwill impairment. In the third quarter of 2016, the company performed
an interim goodwill impairment evaluation, due to current market
circumstances, including a decline in the company's stock price which
resulted in the market capitalization of the company being below its
book value. The company's preliminary calculation determined that the
implied fair value of goodwill for all reporting units was zero and
therefore recorded a goodwill impairment loss of $147.4 million, which
includes $89.6 million of goodwill recognized in the third quarter of
2016 in connection with the company's acquisition of the remaining 50%
of AUOSP, a joint venture for the purpose of manufacturing solar cells
in which the company previously owned 50%. No adjustment to non-GAAP
financial measures was made for the portion of the impairment charge
derived from AUOSP, resulting in a non-GAAP adjustment of $57.8 million.
Management believes that it is appropriate to exclude this impairment
charge from the company's non-GAAP financial measures as it arises from
prior acquisitions, is not reflective of ongoing operating results, and
does not contribute to a meaningful evaluation of a company's past
operating performance. The impact of the AUOSP acquisition to the
company's GAAP and non-GAAP income statements in the third quarter of
2016 was $22.7 million, including a $203.2 million gain on settling
preexisting relationships offset by a $90.9 million loss on the prior
equity method investment and $89.6 million of goodwill impairment.
-- 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.
-- Arbitration ruling. On January 28, 2015, an arbitral tribunal of the
International Court of Arbitration of the International Chamber of
Commerce declared a binding partial award in the matter of an
arbitration between First Philippine Electric Corporation ("FPEC") and
First Philippine Solar Corporation ("FPSC") against SunPower Philippines
Manufacturing, Ltd. ("SPML"), the Company's wholly-owned subsidiary. The
tribunal found SPML in breach of its obligations under its supply
agreement with FPSC, and in breach of its joint venture agreement with
FPEC. The second partial and final awards dated July 14, 2015 and
September 30, 2015, respectively, reduced the estimated amounts to be
paid to FPEC, and on July 22, 2016, SPML entered into a settlement with
FPEC and FPSC and paid a total of $50.5 million in settlement of all
claims between the parties. As a result, the Company recorded its best
estimate of probable loss related to this case at the time of the
initial ruling and updated the estimate as circumstances warranted. As
this loss is nonrecurring 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.
-- 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 and non-GAAP net income 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 TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
GAAP revenue $658,100 $477,191 $1,024,889 $1,871,813 $2,559,562
Adjustments based on IFRS:
8point3 (1,248) (899) 44,991 (1,657) 61,718
Utility and power plant projects 3,306 5,887 (4,047) (14,252) 9,443
Sale of operating lease assets - - (34,406) - (6,396)
Sale-leaseback transactions 163,837 51,412 65,887 272,654 78,533
Non-GAAP revenue $823,995 $533,591 $1,097,314 $2,128,558 $2,702,860
======== ======== ========== ========== ==========
Adjustments to Gross Profit / Margin:
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
GAAP gross profit $(15,232) $15,658 $(32,073) $(15,271) $189,966
Adjustments based on IFRS:
8point3 (432) (377) 1,576 1,250 10,512
Utility and power plant projects (1,529) 3,367 2,542 31,390 10,274
Sale of operating lease assets - - (10,105) - (1,942)
Sale-leaseback transactions 25,839 10,669 8,278 31,094 11,351
Other adjustments:
Cost of above-market polysilicon 81,804 33,461 92,235 166,906 148,265
Stock-based compensation expense 2,783 2,875 4,959 7,894 20,577
Amortization of intangible assets 2,505 2,567 2,568 10,206 7,679
Depreciation of idle equipment 2,300 - - 2,300 -
Non-cash interest expense 2 10 70 32 956
Arbitration ruling - - - - (5,852)
Non-GAAP gross profit $98,040 $68,230 $70,050 $235,801 $391,786
======= ======= ======= ======== ========
GAAP gross margin (%) -2.3% 3.3% -3.1% -0.8% 7.4%
Non-GAAP gross margin (%) 11.9% 12.8% 6.4% 11.1% 14.5%
Adjustments to Net income (loss):
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
GAAP net loss attributable to stockholders $(568,677) $(54,247) $(275,118) $(851,163) $(471,064)
Adjustments based on IFRS:
8point3 2,281 (916) 6,301 11,924 54,379
Utility and power plant projects (1,529) 3,367 2,542 31,390 10,274
Sale of operating lease assets - - (10,086) - (1,889)
Sale-leaseback transactions 28,357 12,440 8,435 38,782 11,700
Other adjustments:
Impairment of residential lease assets 473,709 - - 473,709 -
Cost of above-market polysilicon 81,804 33,461 92,235 166,906 148,265
Stock-based compensation expense 9,294 9,399 12,596 34,674 61,498
Amortization of intangible assets 8,769 3,026 3,018 19,048 17,369
Depreciation of idle equipment 2,300 - - 2,300 -
Non-cash interest expense 25 33 94 128 1,057
Goodwill impairment - - - - 57,765
Restructuring expense 2,769 3,517 175,774 21,045 207,189
Arbitration ruling - - - - (5,852)
IPO-related costs - - (339) (82) (304)
Other - - - - (31)
Tax effect (3,338) 19,407 (12,200) 16,932 (5,315)
Non-GAAP net income (loss) attributable to stockholders $35,764 $29,487 $3,252 $(34,407) $85,041
======= ======= ====== ======== =======
Adjustments to Net income (loss) per diluted share:
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
Net income (loss) per diluted share
Numerator:
GAAP net loss available to common stockholders(1) $(568,677) $(54,247) $(275,118) $(851,163) $(471,064)
========= ======== ========= ========= =========
Non-GAAP net income (loss) available to common stockholders(1) $35,764 $29,487 $3,252 $(34,407) $85,041
======= ======= ====== ======== =======
Denominator:
GAAP weighted-average shares 139,613 139,517 138,442 139,370 137,985
Effect of dilutive securities:
Stock options - - - - -
Restricted stock units 1,570 1,863 66 - 530
Upfront warrants (held by Total) 49 1,406 - - 3,721
Warrants (under the CSO2015) - - - - -
0.75% debentures due 2018 - - - - -
Non-GAAP weighted-average shares(1) 141,232 142,786 138,508 139,370 142,236
======= ======= ======= ======= =======
GAAP net loss per diluted share $(4.07) $(0.39) $(1.99) $(6.11) $(3.41)
====== ====== ====== ====== ======
Non-GAAP net income (loss) per diluted share $0.25 $0.21 $0.02 $(0.25) $0.60
===== ===== ===== ====== =====
(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 TWELVE MONTHS ENDED
------------------ -------------------
Dec. 31, Oct. 1, Jan. 1, Dec. 31, Jan. 1,
2017 2017 2017 2017 2017
---- ---- ---- ---- ----
GAAP net loss attributable to stockholders $(568,677) $(54,247) $(275,118) $(851,163) $(471,064)
Adjustments based on IFRS:
8point3 2,281 (916) 6,301 11,924 54,379
Utility and power plant projects (1,529) 3,367 2,542 31,390 10,274
Sale of operating lease assets - - (10,086) - (1,889)
Sale-leaseback transactions 28,357 12,440 8,435 38,782 11,700
Other adjustments:
Impairment of residential lease assets 473,709 - - 473,709 -
Cost of above-market polysilicon 81,804 33,461 92,235 166,906 148,265
Stock-based compensation expense 9,294 9,399 12,596 34,674 61,498
Amortization of intangible assets 8,769 3,026 3,018 19,048 17,369
Depreciation of idle equipment 2,300 - - 2,300 -
Non-cash interest expense 25 33 94 128 1,057
Goodwill impairment - - - - 57,765
Restructuring expense 2,769 3,517 175,774 21,045 207,189
Arbitration ruling - - - - (5,852)
IPO-related costs - - (339) (82) (304)
Other - - - - (31)
Cash interest expense, net of interest income 22,058 19,492 17,416 79,965 57,734
Provision for (benefit from) income taxes (2,870) (5,457) (9,559) (3,943) 7,319
Depreciation 41,960 43,161 48,099 164,970 156,464
Adjusted EBITDA $100,250 $67,276 $71,408 $189,653 $311,873
======== ======= ======= ======== ========
Q1 2018 and FY 2018 GUIDANCE
(in thousands
except
percentages) Q1 2018 FY 2018
Revenue (GAAP) $280,000-$330,000 $1,600,000-$2,000,000
Revenue (non-
GAAP) (1) $300,000-$350,000 $1,800,000-$2,200,000
Gross margin
(GAAP) (2.5)%-(0.5)% N/A
Gross margin
(non-GAAP) (2) 4%-6% N/A
Net loss (GAAP) $90,000-$110,000 N/A
Adjusted EBITDA
(3) $5,000-$25,000 N/A
(1) Estimated non-GAAP amounts above
for Q1 2018 include net
adjustments that increase revenue
by approximately $20 million
related to sale-leaseback
transactions. 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 Q1 2018 include net
adjustments that increase gross
margin by approximately $20
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 Q1 2018 include net
adjustments that decrease net loss
by approximately $20 million
related to impairment of lease
assets, $20 million related to
cost of above-market polysilicon,
$9 million related to stock-based
compensation expense, $3 million
related to amortization of
intangible assets, $1 million
related to restructuring, $24
million related to interest
expense, $2 million related to
income taxes, and $36 million
related to depreciation.
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.
SUPPLEMENTAL DATA
(In thousands, except percentages)
THREE MONTHS ENDED
December 31, 2017
Revenue Gross profit / margin Operating expenses Other income Benefit from Equity in earnings Gain (Loss) Net income (loss)
(expense), net (provision for) of unconsolidated attributable to non- attributable to
income taxes investees controlling stockholders
interests
---------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring
development and administrative charges
----------- ------------------ -------
GAAP $175,652 $147,559 $334,889 $9,969 5.7% $(27,389) -18.6% $2,188 0.7% $(568,677)
Adjustments based on IFRS:
8point3 (1,330) - 82 (467) - 35 - - - 1,155 - 1,558 - 2,281
Utility and power plant projects - 6,788 (3,482) - 484 (2,013) - - - - - - - (1,529)
Sale-leaseback transactions - 163,837 - - 25,956 (117) - - - 2,518 - - - 28,357
Other adjustments:
Impairment of residential lease
assets - - - - - - - 624,335 - - - - (150,626) 473,709
Cost of above-market polysilicon - - - 17,674 30,056 34,074 - - - - - - - 81,804
Stock-based compensation expense - - - 482 810 1,491 1,131 5,380 - - - - - 9,294
Amortization of intangible
assets - - - 852 873 780 - 6,264 - - - - - 8,769
Depreciation of idle equipment - - - 533 834 933 - - - - - - - 2,300
Non-cash interest expense - - - - 1 1 4 19 - - - - - 25
Restructuring expense - - - - - - - - 2,769 - - - - 2,769
Tax effect - - - - - - - - - - (3,338) - - (3,338)
Non-GAAP $174,322 $318,184 $331,489 $29,043 16.7% $31,625 9.9% $37,372 11.3% $35,764
======== ======== ======== ======= ======= ======= =======
October 1, 2017
---------------
Revenue Gross profit / margin Operating expenses Other income (expense), net Benefit from (provision for) income
taxes Equity in earnings Gain (Loss) Net income (loss)
of unconsolidated attributable to non- attributable to
investees controlling stockholders
interests
---------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $153,258 $106,005 $217,928 $26,644 17.4% $6,017 5.7% $(17,003) -7.8% $(54,247)
Adjustments based on IFRS:
8point3 (1,345) 334 112 (480) 212 (109) - - - 1,070 - (1,609) - (916)
Utility and power plant projects - - 5,887 - - 3,367 - - - - - - - 3,367
Sale-leaseback transactions - 51,412 - - 10,701 (32) - - - 1,771 - - - 12,440
Other adjustments:
Cost of above-market polysilicon - - - 4,751 6,996 21,714 - - - - - - - 33,461
Stock-based compensation expense - - - 869 750 1,256 1,661 4,863 - - - - - 9,399
Amortization of intangible
assets - - - 847 821 899 - 459 - - - - - 3,026
Non-cash interest expense - - - 2 3 5 4 19 - - - - - 33
Restructuring expense - - - - - - - - 3,517 - - - - 3,517
Tax effect - - - - - - - - - - 19,407 - - 19,407
Non-GAAP $151,913 $157,751 $223,927 $32,633 21.5% $25,500 16.2% $10,097 4.5% $29,487
======== ======== ======== ======= ======= ======= =======
January 1, 2017
---------------
Revenue Gross profit / margin Operating expenses Other income (expense), net Benefit from (provision for) income
taxes Equity in earnings Gain (Loss) Net income (loss)
of unconsolidated attributable to non- attributable to
investees controlling stockholders
interests
---------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $220,464 $146,874 $657,551 $12,860 5.8% $(24,470) -16.7% $(20,463) -3.1% $(275,118)
Adjustments based on IFRS:
8point3 (1,313) 2,189 44,115 (503) 1,410 669 - - - 1,075 - 3,650 - 6,301
Utility and power plant projects - - (4,047) - - 2,542 - - - - - - - 2,542
Sale of operating lease assets (34,406) - - (10,105) - - - - - 19 - - - (10,086)
Sale-leaseback transactions - 65,887 - - 8,278 - - - - 157 - - - 8,435
Other adjustments:
Cost of above-market polysilicon - - - 28,377 28,306 35,552 - - - - - - - 92,235
Stock-based compensation expense - - - 902 1,093 2,964 2,141 5,496 - - - - - 12,596
Amortization of intangible
assets - - - 1,109 957 502 - 450 - - - - - 3,018
Non-cash interest expense - - - 26 24 20 3 21 - - - - - 94
Restructuring expense - - - - - - - - 175,774 - - - - 175,774
IPO-related costs - - - - - - - (339) - - - - - (339)
Tax effect - - - - - - - - - - (12,200) - - (12,200)
Non-GAAP $184,745 $214,950 $697,619 $32,666 17.7% $15,598 7.3% $21,786 3.1% $3,252
======== ======== ======== ======= ======= ======= ======
TWELVE MONTHS ENDED
December 31, 2017
-----------------
Revenue Gross profit / margin Operating expenses Other income (expense), net Benefit from (provision for) income
taxes Equity in earnings Gain (Loss) Net income (loss)
of unconsolidated attributable to non- attributable to
investees controlling stockholders
interests
---------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $622,066 $461,932 $787,815 $78,025 12.5% $(21,163) -4.6% $(72,133) -9.2% $(851,163)
Adjustments based on IFRS:
8point3 (5,331) 4,471 (797) (1,927) 2,796 381 - - - 9,351 - 1,323 - 11,924
Utility and power plant projects - 7,115 (21,367) - 811 30,579 - - - - - - - 31,390
Sale-leaseback transactions - 242,217 30,437 - 31,767 (673) - - - 7,688 - - - 38,782
Other adjustments:
Impairment of residential lease
assets - - - - - - - 624,335 - - - - (150,626) 473,709
Cost of above-market polysilicon - - - 31,507 49,184 86,215 - - - - - - - 166,906
Stock-based compensation expense - - - 1,875 2,102 3,917 5,356 21,424 - - - - - 34,674
Amortization of intangible
assets - - - 3,783 3,202 3,221 1,201 7,641 - - - - - 19,048
Depreciation of idle equipment - - - 533 834 933 - - - - - - - 2,300
Non-cash interest expense - - - 8 9 15 16 80 - - - - - 128
Restructuring expense - - - - - - - - 21,045 - - - - 21,045
IPO-related costs - - - - - - - (82) - - - - - (82)
Tax effect - - - - - - - - - - 16,932 - - 16,932
Non-GAAP $616,735 $715,735 $796,088 $113,804 18.5% $69,542 9.7% $52,455 6.6% $(34,407)
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January 1, 2017
---------------
Revenue Gross profit / margin Operating expenses Other income (expense), net Benefit from (provision for) income
taxes Equity in earnings Gain (Loss) Net income (loss)
of unconsolidated attributable to non- attributable to
investees controlling stockholders
interests
---------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $720,331 $436,915 $1,402,316 $116,772 16.2% $(1,796) -0.4% $74,990 5.3% $(471,064)
Adjustments based on IFRS:
8point3 (5,248) 5,370 61,596 (1,657) 3,751 8,418 - - - 4,260 - 39,607 - 54,379
Utility and power plant projects - - 9,443 - - 10,274 - - - - - - - 10,274
Sale of operating lease assets (6,396) - - (1,942) - - - - - 53 - - - (1,889)
Sale-leaseback transactions - 78,533 - - 11,351 - - - - 349 - - - 11,700
Other adjustments:
Cost of above-market polysilicon - - - 41,311 37,868 69,086 - - - - - - - 148,265
Stock-based compensation expense - - - 5,464 4,234 10,879 11,073 29,848 - - - - - 61,498
Amortization of intangible
assets - - - 2,965 3,059 1,655 3,007 6,683 - - - - - 17,369
Non-cash interest expense - - - 227 199 530 17 84 - - - - - 1,057
Goodwill impairment - - - - - - - - - 57,765 - - - 57,765
Restructuring expense - - - - - - - - 207,189 - - - - 207,189
Arbitration ruling - - - (1,345) (922) (3,585) - - - - - - - (5,852)
IPO-related costs - - - - - - - (304) - - - - - (304)
Other - - - - - - - (32) - 1 - - - (31)
Tax effect - - - - - - - - - - (5,315) - - (5,315)
Non-GAAP $708,687 $520,818 $1,473,355 $161,795 22.8% $57,744 11.1% $172,247 11.7% $85,041
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SOURCE SunPower Corp.
