SunPower Reports Second Quarter Results
SAN JOSE, Calif., July 30, 2018 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR) today announced financial results for its second quarter ended July 1, 2018.
Second Quarter Highlights
-- Exceeded Non-GAAP Revenue, Margin and Adjusted EBITDA forecasts
-- Year over year Distributed Generation (DG) volume growth of 45%, US
residential up 15%
-- Strong continued interest in Helix commercial storage application - 35%
attach rate
-- Record bookings quarter for SunPower Solutions group - shipments rose
37% sequentially
-- Increasing focus on Next Generation Technology (NGT) scale-up, volume
production planned in Q4'18
-- $369.2 million non-cash impairment of legacy manufacturing assets
($ Millions, except percentages and per-share data) 2nd Quarter 1st Quarter 2nd Quarter
2018 2018 2017(3)
GAAP revenue $449.1 $391.9 $328.0
GAAP gross margin4 (69.1)% 2.6% 4.9%
GAAP net loss4 $(447.1) $(116.0) $(90.5)
GAAP net loss per diluted share4 $(3.17) $(0.83) $(0.65)
Non-GAAP revenue(1) $447.2 $398.9 $341.5
Non-GAAP gross margin1,2 11.7% 6.5% 12.2%
Non-GAAP net income (loss)1,2 $(1.9) $(28.2) $(49.3)
Non-GAAP net income (loss) per diluted share1,2 $(0.01) $(0.20) $(0.35)
Adjusted EBITDA1,2 $58.6 $32.3 $13.5
Net Debt $1,082.6 $1,347.3 $1,466.0
(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.
4Includes impairment charges of
approximately $369.2 million for
legacy manufacturing assets of
which $355.1 million is recorded
in GAAP gross margin.
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"Strong customer demand in our global DG business, combined with our continuing cost control initiatives, enabled us to exceed our forecasts for the quarter," said Tom Werner, SunPower CEO and chairman of the board. "We also made significant progress on our previously announced efforts to delever our balance sheet and simplify our business model with the monetization of our ownership stake in 8point3 Energy Partners and the planned sale of our microinverter assets to Enphase, as previously announced. Strategically, we remain committed to achieving sustainable profitability, scaling our NGT and improving cash flow.
"We expect to transition to our new upstream and downstream segmentation by the first quarter of 2019. This decision will allow us to focus our downstream efforts on the higher-margin U.S. DG business while growing global sales of our upstream solar panel business through our SunPower Solutions group. Also, this structure will provide the resources to invest in those areas that offer the highest differentiation and growth potential including our industry-leading NGT cell and panel technology, solar-plus-storage solutions, as well as expanding our grid-services offerings," concluded Werner.
"Demand for our industry-leading solutions, as well as the prudent management of our expenses, enabled us to surpass our forecasts," said Manavendra Sial, SunPower chief financial officer. "We were also pleased with the completion of the first phase of our asset monetization strategy as we expect these transactions, as well as others, will provide us with the resources we need to invest in our core growth opportunities that especially enhance our DG business. Additionally, in preparation for our new segmentation, we successfully implemented several lean corporate expense initiatives which will streamline our decision-making processes and reduce future corporate run rate costs. With our cash flow focused strategy, improved balance sheet and the benefits of the transition to our new segmentation in the fourth quarter, we are well positioned to achieve our financial goals this year."
Also, the company continues to execute on its technology roadmaps, including the ramp of its NGT cell and panel technology which is ahead of plan. As a result of this progress the company has made the decision to transition its existing interdigitated back contact (IBC) capacity to NGT cell and panel technology. Accordingly, the company expects to upgrade certain equipment associated with its manufacturing operations for the production of NGT over the next several years. In connection with this evaluation, and other factors, the company recognized non-cash impairment charges of approximately $369.2 million in the second quarter related to the value of its legacy manufacturing assets. Additionally, SunPower remains committed to expanding its U.S. manufacturing footprint and is continuing to work to complete its planned acquisition of SolarWorld Americas. Following closing, which is subject to certain conditions, the company plans to manufacture its proprietary P-Series technology at the SolarWorld Americas Oregon plant.
Second quarter fiscal year (FY) 2018 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $445.2 million, including $369.2 million related to the impairment of property, plant and equipment, $50.4 million related to impairment of residential lease assets, $16.7 million related to cost of above market polysilicon, $6.6 million related to stock-based compensation expense, $4.2 million related to sale-leaseback transactions, $3.5 million related to restructuring expense, $2.4 million related to intangibles, and $1.1 million related to tax effect, partially offset by $8.3 million related to 8point3 Energy Partners tax indemnifications and $0.6 million related to utility and power plant projects.
Financial Outlook
The company's third quarter and FY 2018 GAAP and non-GAAP guidance reflects the impact related to the section 201 trade case.
The company's third quarter GAAP guidance is as follows: revenue of $425 million to $475 million, gross margin of negative 1.0 percent to positive 1.0 percent and a net loss of $215 million to $195 million. Third 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 $450 million to $500 million, gross margin of 6 percent to 8 percent, Adjusted EBITDA of negative $10 million to positive $10 million and megawatts (MW) deployed in the range of 400 MW to 430 MW. Third quarter guidance excludes the impact of the company's proposed acquisition of SolarWorld Americas as well as the potential financial impact of timing differences related to its previously announced proposed asset sales. Additionally, third quarter Adjusted EBITDA guidance assumes an approximate $10 million inventory charge related to the company's second quarter impairment of legacy manufacturing assets.
For FY 2018, the company now expects Adjusted EBITDA to be in the range of $95 million to $125 million compared to its previous guidance of $75 million to $125 million. Additionally, as a result of the asset impairment charge in the second quarter of 2018, the company expects its FY 2018 GAAP net loss to be in the range of $830 million to $860 million. The balance of the company's FY 2018 non-GAAP guidance remains unchanged.
The company will host a conference call for investors this afternoon to discuss its second 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 second 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 MW 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 plans and expectations regarding manufacturing expansion, production goals and production ramps, including the timing of our planned ramp of NGT production, and cost reduction efforts; (b) our plans to delever our balance sheet, simplify our business model, achieve sustainable profitability, provide corporate transparency, streamline decision making, and the impact of these initiatives on our liquidity, financial performance, cash flow, and operating expenses; (c) our plans to invest in technologies and strategic initiatives and allocate resources; (d) our ability to successfully complete key strategic transactions, including the sale of our remaining power plant development assets, our planned monetization of our lease portfolio and associated accounting charges, the sale of our microinverter business, and our expectations regarding the timing and proceeds of such transactions, and their impact on our financial statements; (e) our plans to align into upstream and downstream business units and transition our segmentation accordingly, and the timing and financial impacts of such plans; (f) our strategic goals and plans, and our ability to achieve them, including our plans to expand of our U.S. distributed generation and SunPower Solutions business lines, and our ability to meet global demand; (g) our expectations and plans regarding product focus, growth and market share, profitability, margins, and financial performance in each of our business lines;(h) our ability to fund our planned growth initiatives; (i) the effect of our corporate initiatives to streamline decision-making and reduce costs; (j) our positioning for future success, long-term competitiveness, and our ability to achieve our financial goals; (k) our plans and expectations with respect to acquisition and expansion activities, including the planned SolarWorld Americas acquisition and the planned sale of our microinverter assets to Enphase; (l) our third 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 (m) fiscal year 2018 guidance, including 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 in executing transactions key to our strategic plans; and (10) 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)
July 1, 2018 December 31, 2017
------------ -----------------
Assets
Current assets:
Cash and cash equivalents $256,689 $435,097
Restricted cash and cash
equivalents, current portion 36,941 43,709
Accounts receivable, net 205,795 204,966
Contract assets 70,449 35,074
Inventories 368,407 352,829
Advances to suppliers, current
portion 83,771 30,689
Project assets -plants and land,
current portion 76,347 103,063
Prepaid expenses and other
current assets 121,348 146,209
------- -------
Total current assets 1,219,747 1,351,636
Restricted cash and cash
equivalents, net of current
portion 70,970 65,531
Restricted long-term marketable
securities 5,838 6,238
Property, plant and equipment,
net 757,071 1,147,845
Solar power systems leased and to
be leased, net 359,095 369,218
Advances to suppliers, net of
current portion 117,096 185,299
Long-term financing receivables,
net 379,076 330,672
Other intangible assets, net 20,878 25,519
Other long-term assets 140,039 546,698
------- -------
Total assets $3,069,810 $4,028,656
========== ==========
Liabilities and Equity
Current liabilities:
Accounts payable $349,819 $406,902
Accrued liabilities 196,405 229,208
Contract liabilities, current
portion 91,794 104,286
Short-term debt 58,194 58,131
Convertible debt, current portion - 299,685
Total current liabilities 696,212 1,098,212
Long-term debt 463,696 430,634
Convertible debt, net of current
portion 817,405 816,454
Contract liabilities, net of
current portion 148,182 171,610
Other long-term liabilities 799,339 804,122
------- -------
Total liabilities 2,924,834 3,321,032
--------- ---------
Redeemable noncontrolling
interests in subsidiaries 14,335 15,236
Equity:
Preferred stock - -
Common stock 141 140
Additional paid-in capital 2,455,813 2,442,513
Accumulated deficit (2,232,988) (1,669,897)
Accumulated other comprehensive
loss (1,676) (3,008)
Treasury stock, at cost (186,439) (181,539)
-------- --------
Total stockholders' equity 34,851 588,209
Noncontrolling interests in
subsidiaries 95,790 104,179
------ -------
Total equity 130,641 692,388
------- -------
Total liabilities and equity $3,069,810 $4,028,656
========== ==========
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
Revenue:
Residential $205,181 $169,432 $155,806 $374,613 $290,500
Commercial 127,872 123,336 91,826 251,208 197,272
Power Plant 116,044 99,120 80,349 215,164 169,304
------- ------ ------ ------- -------
Total revenue 449,097 391,888 327,981 840,985 657,076
Cost of revenue:
Residential 254,451 141,390 130,143 395,841 250,063
Commercial 229,013 118,023 88,616 347,036 194,216
Power Plant 275,848 122,227 93,055 398,075 242,214
------- ------- ------ ------- -------
Total cost of revenue 759,312 381,640 311,814 1,140,952 686,493
Gross profit (loss) (310,215) 10,248 16,167 (299,967) (29,417)
Operating expenses:
Research and development 31,210 18,891 19,754 50,101 40,269
Selling, general and administrative 64,719 65,130 68,703 129,849 136,106
Restructuring charges 3,504 11,177 4,969 14,681 14,759
Impairment of residential lease assets 68,269 49,092 - 117,361 -
------ ------ --- ------- ---
Total operating expenses 167,702 144,290 93,426 311,992 191,134
------- ------- ------ ------- -------
Operating loss (477,917) (134,042) (77,259) (611,959) (220,551)
Other income (expense), net:
Interest income 664 529 387 1,193 1,325
Interest expense (26,718) (25,106) (22,505) (51,824) (43,407)
Other, net 36,624 15,794 (14,684) 52,418 (88,772)
Other income (expense), net 10,570 (8,783) (36,802) 1,787 (130,854)
------ ------ ------- ----- --------
Loss before income taxes and equity in earnings (losses) of unconsolidated investees (467,347) (142,825) (114,061) (610,172) (351,405)
Provision for income taxes (3,081) (2,628) (2,353) (5,709) (4,384)
Equity in earnings (losses) of unconsolidated investees (13,415) (2,144) 6,837 (15,559) 9,325
------- ------ ----- ------- -----
Net loss (483,843) (147,597) (109,577) (631,440) (346,464)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests 36,726 31,623 19,062 68,349 36,223
------ ------ ------ ------ ------
Net loss attributable to stockholders $(447,117) $(115,974) $(90,515) $(563,091) $(310,241)
========= ========= ======== ========= =========
Net loss per share attributable to stockholders:
- Basic $(3.17) $(0.83) $(0.65) $(4.01) $(2.23)
- Diluted $(3.17) $(0.83) $(0.65) $(4.01) $(2.23)
Weighted-average shares:
- Basic 140,926 140,212 139,448 140,569 139,175
- Diluted 140,926 140,212 139,448 140,569 139,175
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
Cash flows from operating activities:
Net loss $(483,843) $(147,597) $(109,577) $(631,440) $(346,464)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 38,568 39,833 44,424 78,401 85,671
Stock-based compensation 6,644 7,053 8,606 13,697 15,981
Non-cash interest expense 3,819 4,443 4,777 8,262 7,735
Dividend from 8point3 Energy Partners LP (1,452) 5,399 7,409 3,947 14,601
Equity in (earnings) losses of unconsolidated investees 13,414 2,144 (6,836) 15,559 (9,325)
Gain on sale of equity method investment (34,449) (15,576) (50,025) -
-
Deferred income taxes 1,775 (344) 1,058 1,431 1,285
Impairment of equity method investment - - 8,607 - 81,571
Impairment of property, plant and equipment 369,168 - - 369,168 -
Impairment of residential lease assets 68,269 49,092 - 117,361 -
Other, net (3,415) 972 (617) (2,443) 4,160
Changes in operating assets and liabilities:
Accounts receivable (17,957) 13,924 (23,169) (4,033) 27,482
Contract assets (11,814) (23,561) (2,220) (35,375) 10,181
Inventories (41,654) (34,195) (36,440) (75,849) (76,444)
Project assets (9,398) 20,484 (105,957) 11,086 (73,697)
Prepaid expenses and other assets 23,423 10,885 52,101 34,308 85,365
Long-term financing receivables, net (71,042) (38,114) (31,821) (109,156) (62,405)
Advances to suppliers 9,973 5,149 19,081 15,122 32,782
Accounts payable and other accrued liabilities 20,713 (100,156) 5,296 (79,444) (193,612)
Contract liabilities (2,822) (33,097) 3,479 (35,919) 106,441
------
Net cash used in operating activities (122,080) (233,262) (161,799) (355,342) (288,692)
-------- -------- -------- -------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (16,503) (8,859) (17,246) (25,362) (45,123)
Cash paid for solar power systems, leased and to be leased (14,901) (23,787) (22,811) (38,688) (41,028)
Cash paid for solar power systems (832) (2,604) (3,407) (3,436) (8,012)
Dividend from equity method investees 10,258 2,694 1,421 12,952 1,421
Proceeds from sale of equity method investment 390,484 27,282 - 417,766 -
Cash paid for investments in unconsolidated investees (7,712) (6,349) (1,461) (14,061) (11,603)
Net cash provided by (used in) investing activities 360,794 (11,623) (43,504) 349,171 (104,345)
------- ------- ------- ------- --------
Cash flows from financing activities:
Proceeds from bank loans and other debt 66,665 49,794 90,637 116,459 201,400
Repayment of 0.75% debentures due 2018, bank loans and other debt (368,475) (51,052) (99,913) (419,527) (228,940)
Proceeds from issuance of non-recourse residential financing, net of issuance costs 34,422 32,687 10,062 67,109 30,642
Repayment of non-recourse residential financing (6,118) (3,781) (1,726) (9,899) (3,024)
Contributions from noncontrolling interests and redeemable noncontrolling interests attributable to residential projects 36,564 36,726 47,595 73,290 96,625
Distributions to noncontrolling interests and redeemable noncontrolling interests attributable to residential projects (7,160) (5,422) (4,691) (12,582) (8,454)
Proceeds from issuance of non-recourse power plant and commercial financing, net of issuance costs 13,182 9,104 104,843 22,286 226,661
Repayment of non-recourse power plant and commercial financing (3,788) (890) (3,057) (4,678) (32,021)
Purchases of stock for tax withholding obligations on vested restricted stock (374) (4,526) (153) (4,900) (4,215)
---- ------ ---- ------ ------
Net cash (used in) provided by financing activities (235,082) 62,640 143,597 (172,442) 278,674
-------- ------ ------- -------- -------
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents (1,601) 477 386 (1,124) 1,174
------ --- --- ------ -----
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 2,031 (181,768) (61,320) (179,737) (113,189)
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period 362,569 544,337 462,343 544,337 514,212
------- ------- ------- ------- -------
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period $364,600 $362,569 $401,023 $364,600 $401,023
======== ======== ======== ======== ========
Non-cash transactions:
Transaction fees funded by liability related to the sale of equity method investees $3,911 $ - $ - $3,911 $ -
Costs of solar power systems, leased and to be leased, sourced from existing inventory $7,286 $14,354 $14,078 $21,640 $27,467
Costs of solar power systems, leased and to be leased, funded by liabilities $5,166 $5,835 $7,016 $5,166 $7,016
Costs of solar power systems under sale-leaseback financing arrangements sourced, from project assets $5,789 $9,791 $2,702 $15,580 $55,619
Property, plant and equipment acquisitions funded by liabilities $15,954 $17,218 $40,669 $15,954 $40,669
Contractual obligations satisfied with inventory $23,364 $17,517 $ - $40,881 $6,668
Assumption of debt by buyer upon sale of equity interest $ - $27,321 $ - $27,321 $ -
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 property, plant and equipment, 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. On June 19, 2018, the company sold its equity interest in 8point3.
-- Utility and power plant projects. The company includes adjustments
related to the revenue recognition of certain utility and power plant
projects based on 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 property, plant, and equipment. In the second quarter of
fiscal 2018, the company announced its proposed plan to change the
corporate structure into the Upstream business unit and Downstream
business unit, and long-term strategy to replace IBC technology to NGT.
Accordingly, the company expects to upgrade the equipment associated
with our manufacturing operations for the production of NGT over the
next several years. In connection with these events, the company
determined indicators of impairment existed and therefore performed an
evaluation of the recoverability of the asset group. In accordance with
such evaluation, the company recognized a non-cash impairment charge on
its property, plant and equipment. Such asset impairment is excluded
from the company's segment results as it is non-cash in nature and not
reflective of ongoing segment results.
-- Impairment of residential lease assets. In the fourth quarter of fiscal
2017, the Company made the decision to sell or refinance 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 the Company's solar power systems leased and to be
leased were reduced which resulted in lower depreciation charges. Such
asset impairment and its corresponding depreciation savings are excluded
from the Company's segment results as they are non-cash in nature and
not reflective of ongoing segment results.
-- Cost of above-market polysilicon. The company has entered into multiple
long-term, fixed-price supply agreements to purchase polysilicon for
periods of up to 10 years. The prices in select legacy supply
agreements, which incorporate a cash portion and a non-cash portion
attributable to the amortization of prepayments made under the
agreements, significantly exceed current 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, and revised its depreciation estimates to reflect the
use of certain assets over its shortened useful life. 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 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.
-- 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 SIX MONTHS ENDED
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
GAAP revenue $449,097 $391,888 $327,981 $840,985 $657,076
Adjustments based on IFRS:
8point3 (8,337) - 8,126 (8,337) 13,644
Utility and power plant projects (1,301) (2,043) 1,451 (3,344) 42,847
Sale-leaseback transactions 7,695 9,103 3,927 16,798 57,405
----- ----- ----- ------ ------
Non-GAAP revenue $447,154 $398,948 $341,485 $846,102 $770,972
======== ======== ======== ======== ========
Adjustments to Gross Profit (Loss) / Margin:
THREE MONTHS ENDED SIX MONTHS ENDED
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
GAAP gross profit (loss) $(310,215) $10,248 $16,167 $(299,967) $(29,417)
Adjustments based on IFRS:
8point3 (8,337) - (831) (8,337) (507)
Utility and power plant projects (569) (268) 3,147 (837) 45,838
Sale-leaseback transactions (359) (3,039) (2,270) (3,398) (5,414)
Other adjustments:
Impairment of property, plant and equipment 355,106 - - 355,106 -
Impairment of residential lease assets (4,151) (3,853) - (8,004) -
Cost of above-market polysilicon 16,669 18,700 21,826 35,369 51,641
Stock-based compensation expense 1,627 1,057 1,052 2,684 2,236
Amortization of intangible assets 2,443 2,492 2,567 4,935 5,134
Depreciation of idle equipment - 721 - 721 -
Non-cash interest expense - - 10 - 20
Non-GAAP gross profit $52,214 $26,058 $41,668 $78,272 $69,531
======= ======= ======= ======= =======
GAAP gross margin (%) (69.1)% 2.6% 4.9% (35.7)% (4.5)%
Non-GAAP gross margin (%) 11.7% 6.5% 12.2% 9.3% 9.0%
Adjustments to Net income (loss):
THREE MONTHS ENDED SIX MONTHS ENDED
----------------
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
GAAP net loss attributable to stockholders $(447,117) $(115,974) $(90,515) $(563,091) $(310,241)
Adjustments based on IFRS:
8point3 (8,308) (177) (1,691) (8,485) 76,007
Utility and power plant projects (569) (268) 3,147 (837) 45,838
Sale-leaseback transactions 4,187 1,373 (38) 5,560 (1,747)
Other adjustments:
Impairment of property, plant and equipment 369,168 - - 369,168 -
Impairment of residential lease assets 50,360 45,139 - 95,499 -
Cost of above-market polysilicon 16,669 18,700 21,826 35,369 51,641
Stock-based compensation expense 6,643 8,758 8,606 15,401 15,981
Amortization of intangible assets 2,443 2,492 4,227 4,935 7,253
Depreciation of idle equipment - 721 - 721 -
Non-cash interest expense 23 22 35 45 70
Restructuring expense 3,504 11,177 4,969 14,681 14,759
IPO-related costs - - (196) - (82)
Tax effect 1,072 (170) 350 902 863
----
Non-GAAP net income (loss) attributable to stockholders $(1,925) $(28,207) $(49,280) $(30,132) $(99,658)
======= ======== ======== ======== ========
Adjustments to Net income (loss) per diluted share:
THREE MONTHS ENDED SIX MONTHS ENDED
----------------
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
Net income (loss) per diluted share
Numerator:
GAAP net loss available to common stockholders(1) $(447,117) $(115,974) $(90,515) $(563,091) $(310,241)
========= ========= ======== ========= =========
Non-GAAP net income (loss) available to common stockholders(1) $(1,925) $(28,207) $(49,280) $(30,132) $(99,658)
======= ======== ======== ======== ========
Denominator:
GAAP weighted-average shares 140,926 140,212 139,448 140,569 139,175
Effect of dilutive securities:
Stock options - - - - -
Restricted stock units - - - - -
Upfront Warrants (held by Total) - - - - -
Warrants (under the CSO2015) - - - - -
0.75% debentures due 2018 - - - - -
--- --- ---
Non-GAAP weighted-average shares(1) 140,926 140,212 139,448 140,569 139,175
======= ======= ======= ======= =======
GAAP net loss per diluted share $(3.17) $(0.83) $(0.65) $(4.01) $(2.23)
====== ====== ====== ====== ======
Non-GAAP net income (loss) per diluted share $(0.01) $(0.20) $(0.35) $(0.21) $(0.72)
====== ====== ====== ====== ======
(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 SIX MONTHS ENDED
----------------
July 1, 2018 April 1, 2018 July 2, 2017 July 1, 2018 July 2, 2017
------------ ------------- ------------ ------------ ------------
GAAP net loss attributable to stockholders $(447,117) $(115,974) $(90,515) $(563,091) $(310,241)
Adjustments based on IFRS:
8point3 (8,308) (177) (1,691) (8,485) 76,007
Utility and power plant projects (569) (268) 3,147 (837) 45,838
Sale-leaseback transactions 4,187 1,373 (38) 5,560 (1,747)
Other adjustments:
Impairment of property, plant and equipment 369,168 - - 369,168 -
Impairment of residential lease assets 50,360 45,139 - 95,499 -
Cost of above-market polysilicon 16,669 18,700 21,826 35,369 51,641
Stock-based compensation expense 6,643 8,758 8,606 15,401 15,981
Amortization of intangible assets 2,443 2,492 4,227 4,935 7,253
Depreciation of idle equipment - 721 - 721 -
Non-cash interest expense 23 22 35 45 70
Restructuring expense 3,504 11,177 4,969 14,681 14,759
IPO-related costs - - (196) - (82)
Cash interest expense, net of interest income 21,509 20,165 19,886 41,674 38,415
Provision for (benefit from) income taxes 3,081 2,628 2,353 5,709 4,384
Depreciation 36,983 37,576 40,917 74,559 79,849
------ ------ ------ ------ ------
Adjusted EBITDA $58,576 $32,332 $13,526 $90,908 $22,127
======= ======= ======= ======= =======
Q3 2018 and FY 2018 GUIDANCE
(in thousands
except
percentages) Q3 2018 FY 2018
Revenue (GAAP) $425,000-$475,000 $1,600,000-$2,000,000
Revenue (non-
GAAP)(1) $450,000-$500,000 $1,800,000-$2,200,000
Gross margin
(GAAP) (1)% - 1% N/A
Gross margin
(non-GAAP)(2) 6%-8% N/A
Net loss (GAAP) $195,000-$215,000 $830,000-$860,000
Adjusted
EBITDA(3) $(10,000)-$10,000 $95,000-$125,000
1. Estimated non-GAAP amounts above for Q3
2018 include net adjustments that
increase revenue by approximately $25
million related to sale-leaseback
transactions. Estimated non-GAAP
amounts above for fiscal 2018 include
net adjustments that increase (decrease)
revenue by approximately $210 million
related to sale-leaseback transactions,
$(8) million related to 8point3 tax
indemnifications and $(2) million
related to utility and power plant
projects.
2. Estimated non-GAAP amounts above for Q3
2018 include net adjustments that
increase (decrease) gross margin by
approximately $2 million related to
sale-leaseback transactions, $31
million related to cost of above-market
polysilicon, $(4) million related to
impairment of lease assets, $2 million
related to stock-based compensation
expense, and $1 million related to
amortization of intangible assets.
3. Estimated Adjusted EBITDA amounts above
for Q3 2018 include net adjustments that
decrease net loss by approximately $5
million related to sale-leaseback
transactions, $31 million related to
cost of above-market polysilicon, $97
million related to impairment of lease
assets, $7 million related to stock-
based compensation expense, $26 million
related to depreciation, $3 million
related to amortization of intangible
assets, $7 million related to
restructuring, $24 million related to
interest expense, and $5 million related
to income taxes. Estimated non-GAAP
amounts above for fiscal 2018 include
net adjustments that decrease (increase)
net loss by approximately $14 million
related to sale-leaseback transactions,
$(8) million related to 8point3 tax
indemnifications, $(2) million related
to utility and power plant projects,
$364 million related to impairment of
property, plant and equipment, $105
million related to cost of above-market
polysilicon, $190 million related to
impairment of lease assets, $32 million
related to stock-based compensation
expense, $110 million related to
depreciation, $11 million related to
amortization of intangible assets, $27
million related to restructuring, $93
million related to interest expense, and
$19 million related to income taxes.
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
July 1, 2018
------------
Revenue Gross Profit / Margin Operating expenses
------- --------------------- ------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring Other income Benefit from Equity in Gain (Loss) Net income (loss)
(expense), net (earnings) attributable to
non- attributable to
development and charges (provision losses of controlling
administrative for) interests stockholders
income taxes unconsolidated
investees
---------
GAAP $205,181 $127,872 $116,044 $(49,270) (24.0)% $(101,141) (79.1)% $(159,804) (137.7)% $(447,117)
Adjustments based on IFRS:
8point3 - (2,149) (6,188) - (2,149) (6,188) - - - - - 29 - (8,308)
Utility and power plant projects - (82) (1,219) - (319) (250) - - - - - - - (569)
Sale-leaseback transactions - 7,695 - - (398) 39 - - - 4,546 - - - 4,187
Other adjustments:
Impairment of property, plant and equipment - - - 92,543 103,759 158,804 12,832 1,230 - - - - - 369,168
Impairment of residential lease assets - - - (4,151) - - - 68,269 - - - - (13,758) 50,360
Cost of above-market polysilicon - - - 4,276 7,043 5,350 - - - - - - - 16,669
Stock-based compensation expense - - - 471 570 586 1,054 3,962 - - - - - 6,643
Amortization of intangible assets - - - 922 698 823 - - - - - - 2,443
Non-cash interest expense - - - - - - 3 20 - - - - - 23
Restructuring expense - - - - - - - - 3,504 - - - - 3,504
Tax effect - - - - - - - - - - 1,072 - - 1,072
--- --- ---
Non-GAAP $205,181 $133,336 $108,637 $44,791 21.8% $8,063 6.0% $(640) (0.6)% $(1,925)
======== ======== ======== ======= ====== ===== =======
April 1, 2018
-------------
Revenue Gross Profit / Margin Operating expenses
------- --------------------- ------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring Other income Benefit from Equity in Gain (Loss) Net income (loss)
(expense), net (earnings) attributable to
non- attributable to
development and charges (provision losses of controlling
administrative for) interests stockholders
unconsolidated
income taxes investees
------------ ---------
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 - - - (3,853) - - - 49,092 - - - - (100) 45,139
Cost of above-market polysilicon - - - 5,802 5,057 7,841 - - - - - - - 18,700
Stock-based compensation expense - - - 195 383 479 2,946 4,755 - - - - - 8,758
Amortization of intangible assets - - - 1,047 735 710 - - - - - - 2,492
Depreciation of idle equipment - - - 224 216 281 - - - - - - - 721
Non-cash interest expense - - - - - - 3 19 - - - - - 22
Restructuring expense - - - - - - - - 11,177 - - - - 11,177
Tax effect - - - - - - - - - - (170) - - (170)
--- --- ---
Non-GAAP $169,432 $131,796 $97,720 $31,457 18.6% $8,334 6.3% $(13,733) (14.1)% $(28,207)
======== ======== ======= ======= ====== ======== ========
July 2, 2017
------------
Revenue Gross Profit / Margin Operating expenses
------- --------------------- ------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring Other income Benefit from Equity in Net income (loss)
(expense), net (earnings) attributable to
development and charges (provision
administrative for) losses of stockholders
unconsolidated
income taxes investees
------------ ---------
GAAP (As Reported) $157,125 $100,105 $80,216 $26,138 16.6% $2,575 2.6% $(13,478) (16.8)% $(93,760)
Adoption of ASC 606 (1,319) (8,279) 133 (475) 635 772 - - - 925 - 1,388 3,245
GAAP (As Adjusted) $155,806 $91,826 $80,349 $25,663 16.5% $3,210 3.5% $(12,706) (15.8)% $(90,515)
Adjustments based on IFRS:
8point3 - 9,748 (1,622) (2) 255 (1,084) - - - - - (860) (1,691)
Utility and power plant projects - 328 1,123 - 328 2,819 - - - - - - 3,147
Sale-leaseback transactions - 3,927 - - (2,225) (45) - - - 2,232 - - (38)
Other adjustments:
Stock-based compensation expense - - - 314 293 445 1,036 6,518 - - - - 8,606
Amortization of intangible assets - - - 870 672 1,025 1,201 459 - - - - 4,227
Non-cash interest expense - - - 2 2 6 4 21 - - - - 35
Restructuring expense - - - - - - - - 4,969 - - - 4,969
IPO-related costs - - - - - - - (196) - - - - (196)
Cost of above-market polysilicon - - - 4,731 5,000 12,095 - - - - - - 21,826
Tax effect - - - - - - - - - - 350 - 350
--- --- --- ---
Non-GAAP $155,806 $105,829 $79,850 $31,578 20.3% $7,535 7.1% $2,555 3.2% $(49,280)
======== ======== ======= ======= ====== ====== ========
SIX MONTHS ENDED
July 1, 2018
------------
Revenue Gross Profit / Margin Operating expenses
------- --------------------- ------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring Other income Benefit from Equity in Gain (Loss) Net income (loss)
(expense), net (earnings) attributable to
non- attributable to
development and charges (provision losses of controlling
administrative for) interests stockholders
unconsolidated
income taxes investees
------------ ---------
GAAP $374,613 $251,208 $215,164 $(21,228) (5.7)% $(95,828) (38.1)% $(182,911) (85.0)% $(563,091)
Adjustments based on IFRS:
8point3 - (2,149) (6,188) - (2,149) (6,188) - - - - - (148) - (8,485)
Utility and power plant projects - (725) (2,619) - (769) (68) - - - - - - - (837)
Sale-leaseback transactions - 16,798 - - (3,318) (80) - - - 8,958 - - - 5,560
Other adjustments:
Impairment of property, plant and equipment - - - 92,543 103,759 158,804 12,832 1,230 - - - - - 369,168
Impairment of residential lease assets - - - (8,004) - - - 117,361 - - - - (13,858) 95,499
Cost of above-market polysilicon - - - 10,078 12,100 13,191 - - - - - - - 35,369
Stock-based compensation expense - - - 666 953 1,065 4,000 8,717 - - - - - 15,401
Amortization of intangible assets - - - 1,969 1,433 1,533 - - - - - - - 4,935
Depreciation of idle equipment - - - 224 216 281 - - - - - - - 721
Non-cash interest expense - - - - - - 6 39 - - - - - 45
Restructuring expense - - - - - - - - 14,681 - - - - 14,681
Tax effect - - - - - - - - - - 902 - - 902
--- --- ---
Non-GAAP $374,613 $265,132 $206,357 $76,248 20.4% $16,397 6.2% $(14,373) (7.0)% $(30,132)
======== ======== ======== ======= ======= ======== ========
July 2, 2017
------------
Revenue Gross Profit / Margin Operating expenses
------- --------------------- ------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring Other income Benefit from Equity in Net income (loss)
(expense), net (earnings) attributable to
development and charges (provision
administrative for) losses of stockholders
unconsolidated
income taxes investees
------------ ---------
GAAP (As Reported) $293,156 $208,368 $234,998 $41,412 14.1% $209 0.1% $(57,318) (24.4)% $(228,239)
Adoption of ASC 606 (2,656) (11,096) (65,694) (975) 2,847 (15,592) - - - (71,106) - 2,824 (82,002)
GAAP (As Adjusted) $290,500 $197,272 $169,304 $40,437 13.9% $3,056 1.5% $(72,910) (43.1)% $(310,241)
Adjustments based on IFRS:
8point3 - 15,232 (1,588) (5) (264) (238) - - - 77,964 - (1,450) 76,007
Utility and power plant projects - 328 42,519 - 328 45,510 - - - - - - 45,838
Sale-leaseback transactions - 26,968 30,437 - (4,890) (524) - - - 3,667 - - (1,747)
Other adjustments:
Cost of above-market polysilicon - - - 9,082 12,132 30,427 - - - - - - 51,641
Stock-based compensation expense - - - 524 542 1,170 2,564 11,181 - - - - 15,981
Amortization of intangible assets - - - 2,084 1,508 1,542 1,201 918 - - - 7,253
Non-cash interest expense - - - 6 5 9 8 42 - - - - 70
Restructuring expense - - - - - - - - 14,759 - - - 14,759
IPO-related costs (82) - (82)
Tax effect - - - - - - - - - - 863 - 863
--- --- ---
Non-GAAP $290,500 $239,800 $240,672 $52,128 17.9% $12,417 5.2% $4,986 2.1% $(99,658)
======== ======== ======== ======= ======= ====== ========
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SOURCE SunPower Corp.
