SunPower Reports Strong Fourth Quarter and Fiscal Year 2020 Results

SAN JOSE, Calif., Feb. 17, 2021 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR), a leading solar technology and energy services provider, today announced financial results for its fourth quarter and fiscal year ended January 3, 2021.

"2020 was a transformational year for SunPower: we successfully completed the spin-off of Maxeon, significantly improved our financial performance and rapidly shifted our sales strategy to meet increasing U.S. demand as consumers and businesses look to generate and store their own energy. Entering 2021, we are continuing to focus our efforts and investment on those markets that offer us strong growth potential -- storage and energy services," said Tom Werner, SunPower CEO and chairman of the board. "We also finished the year with strong execution as we exceeded our GAAP net income and Adjusted EBITDA guidance, expanded our margins, strengthened our balance sheet and generated positive cash flow. Looking forward, with favorable industry tailwinds, increasing demand for our innovative solar solutions and further investment to significantly expand our solar and storage addressable market, we believe we are positioned to accelerate our growth through 2022 and beyond."

Fourth Quarter Company Highlights

    --  Strong sequential revenue / margin growth - met or exceeded guidance,
        $412 million net income, $39 million Adjusted EBITDA
    --  Further delevered balance sheet - successful convert tender, achieved
        net debt target ahead of plan

Residential and Light Commercial (RLC)

    --  Residential strength - 24% gross margin, $36 million Adjusted EBITDA
    --  Added 13,000 customers, achieved record new homes backlog, rapidly
        ramping SunVault storage deployments
    --  Expanded sales channels to increase market access and profitability -
        continued investment in software and energy services platform, digital
        and direct sales channel

Commercial and Industrial Solutions (C&I Solutions)

    --  Strong execution - MW recognized up >65% sequentially, 18% gross margin,
        $8 million Adjusted EBITDA
    --  Helix storage - >30% sales attach rate in 2020, backlog of >50MWh,
        pipeline >750MWh
    --  Community Solar platform pipeline >90MW


                 ($ Millions, except
                  percentages and per-share
                  data)                     
     
     4th Quarter 2020    
     
     3rd Quarter 2020     
     
     4th Quarter 2019      
     
     Fiscal Year 2020       
     
     Fiscal Year 2019



     GAAP revenue                                           $341.8                   $274.8                    $401.6                   $1,124.8                    $1,092.2


      GAAP gross margin from
       continuing operations                                  22.0%                   13.5%                    21.4%                     14.9%                      15.0%


      GAAP net income from
       continuing operations                                 $412.5                   $109.5                     $47.4                     $599.4                      $206.8


      GAAP net income (loss) from
       continuing operations per
       diluted share                                          $2.08                    $0.57                     $0.29                      $3.11                       $1.31



     Non-GAAP revenue(1)                                    $341.8                   $274.8                    $404.8                   $1,130.0                    $1,220.1


      Non-GAAP gross margin(1)                                22.3%                   14.0%                    22.5%                     15.7%                      15.4%


      Non-GAAP net (loss)
       income(1)                                              $26.6                   $(6.5)                    $36.4                    $(12.3)                    $(18.4)


      Non-GAAP net (loss) income
       from continuing operations
       per diluted share(1)                                   $0.14                  $(0.04)                    $0.23                    $(0.07)                    $(0.13)



     Adjusted EBITDA(1)                                      $38.6                     $8.6                     $56.8                      $40.1                       $58.9



     MW Recognized                                             153                      108                       188                        483                         510



     Cash(2)                                                $232.8                   $324.7                    $302.0                     $232.8                      $302.0

               Information presented above is
                for continuing operations only,
                and excludes results of Maxeon
                for all periods presented.




                            (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)Includes cash, and cash
                             equivalents, excluding
                             restricted cash

RLC
In the fourth quarter, RLC MW recognized increased by 35 percent sequentially due to strong demand across its retrofit, new homes and light commercial businesses. In residential, the company added more than 13,000 new customers, bringing its total installed base to more than 350,000. Gross margin for the quarter was 24%, driven by improved pricing, increasingly better financing economics and a continued mix shift to higher margin loan and lease sales as customers take advantage of SunPower's new, lower cost financing options. Also, customer demand for resiliency and energy management capabilities continues to drive significant interest in the company's SunVault residential solar plus storage solution as attach rates exceeded 20% in the fourth quarter. Given this strong demand, the company expects SunVault revenue of $100 million in 2021 and remains very confident in its battery supply chain to meet its forecasts. Finally, the company expanded its leadership in new homes with record backlog in the quarter as its current backlog now exceeds 180 MW with an additional 10 communities booked in the first month of year. As a result of these positive trends, continued investment in its digital and product strategy, as well as its initiatives to expand its addressable market through new sales channels, SunPower expects to see more than 40 percent annual revenue growth in its RLC segment through at least 2022.

C&I Solutions
The company's C&I Solutions business also performed well in the fourth quarter, maintaining its leading market position as installs rose more than 65 percent sequentially. Solid financial performance was primarily driven by gross margin expansion and strong execution on cost control programs. Demand for the company's Helix® storage solution also remains high as the company installed 18 MWh during the year as well as signing its first contracts associated with the California ESGIP storage program in the fourth quarter. Additionally, the company continued to expand its community solar pipeline to more than 90MW during the quarter. With a combined backlog and pipeline of more than 800 MWh and sales attach rates of 30%, the company believes C&I is well positioned to capitalize on the increased demand for its commercial storage and services solutions.

Consolidated Financials
"We were pleased with our execution and financial results for the quarter while continuing to aggressively invest in a number of strategic initiatives to rapidly expand our addressable market, including in our storage, digital and services platforms" said Manavendra Sial, SunPower chief financial officer. "We successfully completed our tender offer for our 2021 convertible bonds and our business units generated cash, enabling us to achieve our net debt target ahead of our analyst day forecast. Finally, we continued to make progress on lowering our cost of capital in both our residential loan and lease offerings, driving margin improvement as well as allowing us to maximize customer value."

Fourth quarter of fiscal year 2020 non-GAAP results exclude net adjustments that, in the aggregate, increased GAAP income by $385.9 million, including $416.5 million related to a mark-to-market gain on equity investments. This was partially offset by $18.7 for income taxes, $6.2 million related to stock-based compensation expense, $3.7 million related to litigation expenses and $2.0 million related to business reorganization costs and other non-recurring items.

Financial Outlook
The company's first quarter and fiscal year 2021 guidance is as follows:

First quarter GAAP revenue of $270 to $330 million, GAAP net loss of $20 million to $10 million, MW recognized of 115 MW to 145 MW and Adjusted EBITDA in the range of $10 to $20 million.

For fiscal year 2021, given the confidence it has in its business coming into the year, the company expects to meet or exceed its 2021 guidance provided at its Capital Markets Day including revenue growth of approximately 35% and MW recognized growth of approximately 25%.

Given strong industry tailwinds, continued federal policy support as well increased demand for its residential and commercial storage solutions, the company expects 2022 Adjusted EBITDA growth of more than 40%.

The company will host a conference call for investors this afternoon to discuss its fourth quarter 2020 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at https://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 2020 performance on the Events and Presentations section of SunPower's Investor Relations page at https://investors.sunpower.com/events.cfm.

About SunPower
Headquartered in California's Silicon Valley, SunPower (NASDAQ:SPWR) is a leading Distributed Generation Storage and Energy Services provider in North America. SunPower offers the only solar + storage solution designed by one company that gives customers complete control over energy consumption, delivering grid independence, resiliency during power outages and cost savings to homeowners, businesses, governments, schools and utilities. For more information, 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 for our products, including anticipated demand and impacts on our market position and our ability to meet our targets and goals; (b) the anticipated financial impacts of our new residential leasing facility and expectations for demand, capacity and timing of full utilization; (c) expectations regarding our future performance based on bookings, backlog, and pipelines in our sales channels; (d) our expectations regarding our industry and market factors, including market and industry trends, and anticipated demand and volume; (e) the expected performance of our business lines, including confidence in 2021 forecasts, areas of focus, and new product cycles, as well as projected growth and attach rates; (f) our first quarter fiscal 2021 guidance, including GAAP revenue, net income, MW recognized, and Adjusted EBITDA, and related assumptions; and (g) our fiscal 2021 guidance, including GAAP revenue, net income, MW recognized, and Adjusted EBITDA and related assumptions; and (h) our expectations for 2022 Adjusted EBITDA growth and related assumptions.

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) potential disruptions to our operations and supply chain that may result from epidemics or natural disasters, including impacts of the Covid-19 pandemic; (2) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (3) regulatory changes and the availability of economic incentives promoting use of solar energy; (4) 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; (5) changes in public policy, including the imposition and applicability of tariffs; (6) our dependence on sole- or limited-source supply relationships, including our exclusive supply relationship with Maxeon Solar Technologies; (7) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (8) challenges managing our acquisitions, joint ventures and partnerships, including our ability to successfully manage acquired assets and supplier relationships; and (9) challenges in executing transactions key to our strategic plans, including regulatory and other challenges that may arise. 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.

©2020 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, HELIX, SUNVAULT, ONEROOF and THE POWER OF ONE are trademarks or registered trademarks of SunPower Corporation in the U.S.


                                            
          
                SUNPOWER CORPORATION


                                          
          
              CONSOLIDATED BALANCE SHEETS


                                              
           
                (In thousands)


                                               
           
                (Unaudited)


                                                    January 3, 2021                                      December 29, 2019

                                                                                                  ---


     
                Assets



     Current assets:


      Cash and cash equivalents                             232,765                                       $
              301,999


      Restricted cash and cash
       equivalents, current portion                           5,518                               26,348


      Accounts receivable, net                              108,864                              127,878



     Contract assets                                       114,506                               99,426



     Inventories                                           210,582                              163,405


      Advances to suppliers, current
       portion                                                2,814                               31,843


      Project assets -plants and land,
       current portion                                       21,015                               12,650


      Prepaid expenses and other current
       assets                                                94,251                               86,755


      Current assets of discontinued
       operations                                                 -                             530,627




     Total current assets                                  790,315                            1,380,931




      Restricted cash and cash
       equivalents, net of current
       portion                                                8,521                                9,354


      Property, plant and equipment, net                     46,766                               55,860


      Operating lease right-of-use
       assets                                                54,070                               40,699


      Solar power systems leased, net                        50,401                               54,338


      Other intangible assets, net                              697                                7,121



     Other long-term assets                                695,712                              277,805


      Long-term assets of discontinued
       operations                                                 -                             345,813




     Total assets                                                    $
              1,646,482                                   $
       2,171,921






     
                Liabilities and Equity



     Current liabilities:



     Accounts payable                                                  $
              166,066                                     $
       207,062



     Accrued liabilities                                   121,915                              116,276


      Operating lease liabilities,
       current portion                                        9,736                                7,559


      Contract liabilities, current
       portion                                               72,424                               91,345



     Short-term debt                                        97,059                               44,473


      Convertible debt, current portion                      62,531


      Current liabilities of
       discontinued operations                                    -                             431,694



      Total current liabilities                             529,731                              898,409





     Long-term debt                                         56,447                              112,340



     Convertible debt                                      422,443                              820,259


      Operating lease liabilities, net
       of current portion                                    43,608                               36,657


      Contract liabilities, net of
       current portion                                       30,170                               31,922


      Other long-term liabilities                           157,597                              157,774


      Long-term liabilities of
       discontinued operations                                    -                              93,061




     Total liabilities                                   1,239,996                            2,150,422






     Equity:



     Preferred stock                                             -



     Common stock                                              170                                  168


      Additional paid-in capital                          2,685,920                            2,661,819



     Accumulated deficit                               (2,085,246)                         (2,449,679)


      Accumulated other comprehensive
       income (loss)                                          8,799                              (9,512)



     Treasury stock, at cost                             (205,476)                           (192,633)



      Total stockholders' equity                            404,167                               10,163


      Noncontrolling interests in
       subsidiaries                                           2,319                               11,336




     Total equity                                          406,486                               21,499



      Total liabilities and equity                                    $
              1,646,482                                   $
       2,171,921


                                                                                                            
              
                SUNPOWER CORPORATION


                                                                                                      
           
                CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                   
        
                (In thousands, except per share data
            )


                                                                                                                
              
                (Unaudited)


                                                                                            
        
          THREE MONTHS ENDED                                                                TWELVE MONTHS ENDED



                                                                             January 3,                                   September 27,
                                                                                                                           2020                                     December 29, 2019                         January 3,                                     December
                                                                                   2021                                                                                                2021                              29, 2019




     Revenue:



     Solar power systems, components, and other                                        $
        338,507                                                      $
          267,619                          $
              397,526                         $
             1,103,823      $
              1,063,150



     Residential leasing                                                         1,386                         1,284                                                            1,322                             5,323                10,405



     Solar services                                                              1,917                         5,903                                                            2,769                            15,683                18,671




     Total revenue                                                             341,810                       274,806                                                          401,617                         1,124,829             1,092,226



     Cost of revenue:



     Solar power systems, components, and other                                264,515                       233,144                                                          312,352                           946,164               913,299



     Residential leasing                                                         1,073                         1,209                                                            1,406                             4,795                 7,345



     Solar services                                                              1,071                         3,313                                                            1,785                             6,743                 8,104




     Total cost of revenue                                                     266,659                       237,666                                                          315,543                           957,702               928,748



     Gross profit                                                               75,151                        37,140                                                           86,074                           167,127               163,478



     Operating expenses:



     Research and development                                                    3,275                         5,344                                                            7,723                            22,381                34,217



     Sales, general and administrative                                          52,510                        35,462                                                           42,526                           164,703               172,109



     Restructuring charges                                                       (134)                         (97)                                                           8,001                             2,604                14,627



     Loss on sale and impairment of residential lease assets                     (208)                          386                                                          (2,931)                               45                25,352



     Income from transition services agreement, net                            (4,371)                      (1,889)                                                                                          (6,260)



     Gain on business divestiture                                                  124                                                                                                                       (10,334)            (143,400)




     Total operating expenses (income)                                          51,196                        39,206                                                           55,319                           173,139               102,905




     Operating income (loss)                                                    23,955                       (2,066)                                                          30,755                           (6,012)               60,573



     Other income (expense), net:



     Interest income                                                                72                           104                                                              129                               754                 2,313



     Interest expense                                                          (8,422)                      (7,090)                                                         (8,392)                         (33,153)             (48,962)



     Other, net                                                                415,880                       155,457                                                           31,740                           692,980               177,084




     Other income, net                                                         407,530                       148,471                                                           23,477                           660,581               130,435



      Income before income taxes and equity in earnings of unconsolidated
       investees                                                                431,485                       146,405                                                           54,232                           654,569               191,008



     Provision for income taxes                                               (18,833)                     (36,725)                                                          (6,435)                         (57,549)             (16,509)



     Equity in losses of unconsolidated investees                                                                                                                           (1,000)                                               (1,716)




     Net income from continuing operations                                     412,652                       109,680                                                           46,797                           597,020               172,783



      Loss from discontinued operations before income taxes and equity in
       losses of unconsolidated investees                                                                   (70,761)                                                         (33,859)                         (125,599)            (165,040)



     Provision for income taxes                                                                               6,137                                                          (2,953)                            3,191              (10,122)



     Equity in earnings (losses) of unconsolidated investees                                                     58                                                          (4,008)                            (586)              (5,342)




     Net loss from discontinued operations, net of taxes                                                   (64,566)                                                         (40,820)                         (122,994)            (180,504)




     Net income (loss)                                                         412,652                        45,114                                                            5,977                           474,026               (7,721)


      Net income (loss) from continuing operations attributable to
       noncontrolling interests and redeemable noncontrolling interests           (177)                        (230)                                                             563                             2,335                34,037


      Net loss from discontinued operations attributable to noncontrolling
       interests and redeemable noncontrolling interests                                                       (258)                                                         (1,100)                          (1,313)              (4,157)


      Net income (loss) attributable to noncontrolling interests and
       redeemable noncontrolling interests                                        (177)                        (488)                                                           (537)                            1,022                29,880



      Net income from continuing operations attributable to stockholders                $
        412,475                                                      $
          109,450                           $
              47,360                           $
             599,355        $
              206,820


      Net loss from discontinued operations attributable to stockholders   
              $                                                                  $
          (64,824)                        $
              (41,920)                        $
             (124,307)     $
              (184,661)




     Net income (loss) attributable to stockholders                                    $
        412,475                                                       $
          44,626                            $
              5,440                           $
             475,048         $
              22,159





      Net income (loss) per share attributable to stockholders -basic:



     Continuing operations                                                                $
        2.42                                                         $
          0.64                             $
              0.31                              $
             3.53           $
              1.43



     Discontinued operations                                              
              $                                                                    $
          (0.38)                          $
              (0.27)                           $
             (0.73)        $
              (1.28)



     Net income (loss) per share - basic                                                  $
        2.42                                                         $
          0.26                             $
              0.04                              $
             2.80           $
              0.15




      Net income (loss) per share attributable to stockholders -diluted:



     Continuing operations                                                                $
        2.08                                                         $
          0.57                             $
              0.29                              $
             3.11           $
              1.31



     Discontinued operations                                              
              $                                                                    $
          (0.33)                          $
              (0.24)                           $
             (0.63)        $
              (1.09)



     Net income (loss) per share - diluted                                                $
        2.08                                                         $
          0.24                             $
              0.05                              $
             2.48           $
              0.22





     Weighted-average shares:



     Basic                                                                     170,267                       170,113                                                          152,439                           169,801               144,796



     Diluted                                                                   200,132                       198,526                                                          178,129                           197,242               169,650


                                                                                                                                   
         
               SUNPOWER CORPORATION


                                                                                                                          
              
          CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                                      
        
                (In thousands)


                                                                                                                                       
        
                (Unaudited)


                                                                                           
          
      THREE MONTHS ENDED                                                                       TWELVE MONTHS ENDED



                                                                          January 3,                                 September 27,
                                                                                                                      2020                                     December 29, 2019        January 3,                        December 29, 2019
                                                                                2021                                                                                               2021




     
                Cash flows from operating activities:



     Net income (loss)                                                              $
          412,652                                                $
              45,114                                              $
           5,977                           $
         474,026        $
           (7,721)


      Adjustments to reconcile net income (loss) to net cash used in
       operating activities:



     Depreciation and amortization                                            2,567                       11,927                                                           18,059                                           48,304                   80,081



     Stock-based compensation                                                 6,029                        6,042                                                            8,008                                           24,817                   26,935



     Non-cash interest expense                                                1,067                        1,747                                                            2,005                                            6,562                    9,472



     Non-cash restructuring charges                                                                                                                                                                                                               5,874



     Bad debt expense                                                         (464)                     (2,568)                                                                                                             534                    1,024


      Equity in (earnings) losses of unconsolidated investees                                               (58)                                                           5,008                                              586                    7,058


      Gain on equity investments with readily determinable fair value      (416,455)                   (155,431)                                                         (29,250)                                        (692,100)               (158,288)



     Loss (gain) on retirement of convertible debt                              878                        (104)                                                                                                         (2,182)



     Loss (gain) on business divestiture                                        125                                                                                                                                     (10,334)               (143,400)


      Gain on sale of equity investments without readily determinable
       fair value                                                                                                                                                                                                                               (17,275)



     Deferred income taxes                                                   17,602                          607                                                            4,567                                           19,241                    5,067


      Loss (gain) on sale and impairment of residential lease assets             209                          386                                                          (2,931)                                           1,024                   33,778



     Impairment of property, plant and equipment                                                                                                                        (3,829)                                                                     777



     Gain on sale of assets                                                                                                                                                                                                                    (25,212)



     Changes in operating assets and liabilities:



     Accounts receivable                                                   (14,067)                      54,119                                                         (20,484)                                           98,962                 (67,218)



     Contract assets                                                         10,708                     (19,902)                                                        (20,139)                                         (12,063)                (38,246)



     Inventories                                                           (17,701)                     (5,382)                                                        (20,311)                                         (29,808)               (128,404)



     Project assets                                                           3,015                          703                                                            7,050                                          (8,187)                 (2,188)



     Prepaid expenses and other assets                                      (1,837)                    (32,362)                                                        (10,228)                                          (6,161)                 (8,746)



     Operating lease right-of-use assets                                        654                        2,112                                                            2,311                                           10,552                    8,530



     Long-term financing receivables, net - held for sale                                                                                                                                                                                         (473)



     Advances to suppliers                                                  (2,814)                       4,267                                                           16,899                                           13,482                   50,191



     Accounts payable and other accrued liabilities                         (3,129)                      51,095                                                           15,384                                         (78,269)                  79,394



     Contract liabilities                                                    17,842                      (3,364)                                                          19,404                                         (35,976)                  27,531



     Operating lease liabilities                                            (1,759)                     (2,620)                                                         (1,752)                                        (10,401)                 (8,954)




     Net cash provided by (used in) operating activities                     15,122                     (43,672)                                                         (4,252)                                       (187,391)               (270,413)




     
                Cash flows from investing activities:



     Purchases of property, plant and equipment                             (1,403)                     (2,369)                                                        (12,295)                                         (14,577)                (47,395)



     Cash paid for solar power systems                                      (1,134)                     (2,747)                                                         (1,458)                                         (6,528)                (53,284)



     Proceeds from sale of assets                                                                                                                                        20,000                                                                   59,970


      Cash outflow upon Maxeon Solar Spin-off, net of proceeds                 8,996                    (140,132)                                                                                                        (131,136)



     Proceeds from maturities of marketable securities                                                    6,588                                                                                                            6,588


      Proceeds from business divestiture, net of de-consolidated cash                                                                                                                                                     15,418                   40,491



     Purchases of marketable securities                                                                 (1,338)                                                                                                         (1,338)



     Cash outflow from sale of residential lease portfolio                                                                                                                                                                                     (10,923)


      Proceeds from sale of distribution rights of debt financing                                                                                                          1,950                                                                    1,950


      Proceeds from return of capital of equity investments with fair
       value option                                                                                                                                                        5,474                                            7,724



     Proceeds from sale of investments                                      133,600                       73,290                                                                                                          253,039                   42,957



     Cash paid for investments with fair value option                                                                                                                                                                                          (12,400)




     Net cash provided by (used in) investing activities                    140,059                     (66,708)                                                          13,671                                          129,190                   21,366




     
                Cash flows from financing activities:



     Proceeds from bank loans and other debt                                 32,752                       62,233                                                          150,439                                          216,483                  381,928



     Repayment of bank loans and other debt                                (44,607)                    (63,735)                                                        (61,920)                                        (227,677)               (271,015)


      Proceeds from issuance of non-recourse residential financing,
       net of issuance costs                                                   1,355                                                                                                                                       14,789                   72,259


      Repayment of non-recourse commercial and residential financing         (1,813)                     (7,231)                                                                                                         (9,044)                 (2,959)


      Contributions from noncontrolling interests and redeemable
       noncontrolling interests attributable to residential projects             324                        (302)                                                           4,371                                               22                   31,413


      Distributions to noncontrolling interests and redeemable
       noncontrolling interests attributable to residential projects         (1,414)                          22                                                                                                          (1,392)                   (316)


      Proceeds from issuance of non-recourse power plant and
       commercial financing, net of issuance costs                                                         2,790                                                            3,004                                                                    3,004



     Payment for prior business combination                                                                                                                            (30,000)                                                                 (39,000)


      Proceeds of common stock equity offering, net of offering costs                                                                                                    171,834                                                                  171,834



     Cash paid for repurchase of convertible debt                         (239,554)                     (8,037)                                                                                                       (334,732)



     Proceeds from issuance of convertible debt                                                         200,000                                                                                                          200,000


      Settlement of contingent consideration arrangement, net of cash
       received                                                                (776)                                                                                         802                                            (776)                 (1,646)


      Receipt of contingent asset of a prior business combination                                             11                                                                                                            2,245



     Equity offering costs paid                                                                                                                                                                                           (928)


      Purchases of stock for tax withholding obligations on vested
       restricted stock                                                      (4,387)                        (74)                                                           (908)                                        (12,842)                 (5,565)




     Net cash (used in) provided by financing activities                  (258,120)                     185,677                                                          237,622                                        (153,852)                 339,937



      Effect of exchange rate changes on cash, cash equivalents,
       restricted cash and restricted cash equivalents                          (22)                         109                                                              881                                              200                    (373)



      Net increase (decrease) in cash, cash equivalents, restricted
       cash and restricted cash equivalents                                (102,961)                      75,406                                                          247,922                                        (211,853)                  90,517



      Cash, cash equivalents, restricted cash and restricted cash
       equivalents, beginning of period(1)                                   349,765                      274,359                                                          210,735                                          458,657                  363,763



      Cash, cash equivalents, restricted cash and restricted cash
       equivalents, end of period(1)                                                 $
          246,804                                               $
              349,765                                            $
           458,657                           $
         246,804        $
           454,280






     
                Non-cash transactions:



     Costs of solar power systems funded by liabilities                                 $
          635                                                   $
              598                                              $
           2,671                               $
         635          $
           2,671


      Costs of solar power systems sourced from existing inventory                     $
          1,018                
              $                                                                                  $
           21,173                             $
         1,018         $
           29,206


      Property, plant and equipment acquisitions funded by liabilities                   $
          866                                                    $
              36                                             $
           13,745                               $
         866         $
           13,745



     Contractual obligations satisfied with inventory                  
              $                               
              $                                                                                   $
           1,701             
              $                         $
           1,701


      Assumption of debt by buyer in connection with sale of
       residential lease assets                                         
              $                               
              $                                                           
              $                                      
              $                        $
           69,076


      Right-of-use assets obtained in exchange of lease
       obligations(2)                                                                  $
          1,008                                                 $
              7,875                                              $
           7,398                            $
         22,794        $
           111,142


      Derecognition of financing obligations upon business divestiture  
              $                               
              $                                                           
              $                                      
              $                       $
           590,884


      Assumption of liabilities in connection with business divestiture                $
          9,056                                                 $
              9,056                      
              $                                                      $
         9,056  
     $



     Holdbacks in connection with business divestiture                                $
          7,199                                                 $
              7,199                      
              $                                                      $
         7,199  
     $


      Holdbacks related to the sale of commercial sale-leaseback
       portfolio                                                        
              $                               
              $                                                                                   $
           1,927             
              $                         $
           1,927


      Receivables in connection with sale of residential lease
       portfolio                                                        
              $                               
              $                                                                                   $
           2,570             
              $                         $
           2,570


      Aged supplier financing balances reclassified from accounts
       payable to short-term debt                                       
              $                                                               $
              39,178                                             $
           22,500             
              $                        $
           45,352



                         1"Cash, cash equivalents,
                           restricted cash and restricted
                           cash equivalents" balance
                           consisted of "cash and cash
                           equivalents", "restricted cash
                           and cash equivalents, current
                           portion" and "restricted cash
                           and cash equivalents, net of
                           current portion" financial
                           statement line items on the
                           condensed consolidated balance
                           sheets for the respective
                           periods.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures. The specific non-GAAP measures listed below are: revenue; gross margin; net loss; net loss per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). Management believes that each of these non-GAAP measures are 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 provide 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 analysis. 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; and therefore, 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 gross margin includes adjustments relating to gain/loss on sale and impairment of residential lease assets, impairment of property, plant and equipment, stock-based compensation, and amortization of intangible assets, each of which is described below. In addition to the above adjustments, non-GAAP net loss and non-GAAP net loss per diluted share are adjusted for adjustments relating to mark to market gain on equity investments, litigation, gain on business divestiture, , transaction-related costs, business reorganization costs, restructuring charges (credits), gain on convertible debt repurchased, tax effect of these non-GAAP adjustments, each of which is described below. In addition to the above adjustments, Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation.

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

The company's non-GAAP results include adjustments under IFRS that are consistent with the adjustments made in connection with the company's internal reporting process as part of its status as a consolidated subsidiary of Total SE, our controlling shareholder and a foreign public registrant that 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 performance, and assists in aligning the perspectives of the management with those of Total SE.

    --  Legacy utility and power plant projects: The company included
        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 our project
        development efforts at the time of initial project sale. Under IFRS,
        such projects were accounted for when the customer obtains control of
        the promised goods or services which generally results in earlier
        recognition of revenue and profit than U.S. GAAP. Over the life of each
        project, cumulative revenue and gross margin are eventually equivalent
        under both GAAP and IFRS; however, revenue and gross margin is generally
        recognized earlier under IFRS.
    --  Legacy sale-leaseback transactions: The company included adjustments
        related to the revenue recognition on certain legacy sale-leaseback
        transactions entered into before December 31, 2018, based on the net
        proceeds received from the buyer-lessor. Under U.S. GAAP, these
        transactions were accounted for under the financing method in accordance
        with the applicable 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 our incremental
        borrowing rate adjusted solely to prevent negative amortization. Under
        IFRS, such revenue and profit is recognized at the time of sale to the
        buyer-lessor if certain criteria are met. Upon adoption of IFRS 16,
        Leases, on December 31, 2018, IFRS is aligned with GAAP.
    --  Mark-to-market gain in equity investments: The company recognizes
        adjustments related to the fair value of equity investments with readily
        determinable fair value based on the changes in the stock price of these
        equity investments at every reporting period. Under GAAP, mark-to-market
        gains and losses due to changes in stock prices for these securities are
        recorded in earnings while under IFRS, an election can be made to
        recognize such gains and losses in other comprehensive income. Such an
        election was made by Total SE. Further, we elected the Fair Value Option
        ("FVO") for some of our equity method investments, and we adjust the
        carrying value of those investments based on their fair market value
        calculated periodically. Such option is not available under IFRS, and
        equity method accounting is required for such investments. Management
        believes that excluding these adjustments on equity investments is
        consistent with our internal reporting process as part of its status as
        a consolidated subsidiary of Total SE. and better reflects our ongoing
        results.

Other Non-GAAP Adjustments

    --  Gain/loss on sale and impairment of residential lease assets: In fiscal
        2018 and 2019, in an effort to deconsolidate all the residential lease
        assets owned by us, the company sold membership units representing a 49%
        membership interest in its residential lease business and retained a 51%
        membership interest. The loss on divestment, including adjustments to
        contingent consideration shortly after the closure of the transaction,
        and the remaining unsold residential lease assets impairment with its
        corresponding depreciation savings are excluded from the company's
        non-GAAP results as they are non-recurring in nature and not reflective
        of ongoing operating results.
    --  Construction revenue on solar services contracts: Upon adoption of the
        new lease accounting guidance ("ASC 842") in the first quarter of fiscal
        2019, revenue and cost of revenue on solar services contracts with
        residential customers are recognized ratably over the term of those
        contracts, once the projects are placed in service. For non-GAAP
        results, the company recognizes revenue and cost of revenue upfront
        based on the expected cash proceeds to align with the legacy lease
        accounting guidance. Management believes it is appropriate to recognize
        revenue and cost of revenue upfront based on total expected cash
        proceeds, as it better reflects the company's ongoing results as such
        method aligns revenue and costs incurred most accurately in the same
        period. Starting in second quarter of fiscal 2020, we no longer have
        this non-GAAP measure.
    --  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, which are not reflective
        of ongoing operating results.
    --  Gain on business divestiture: In second quarter of fiscal 2020, the
        company sold its Operations and Maintenance ("O&M") contracts business
        to a third-party buyer. Similarly, in fiscal 2019, the company sold all
        of its membership interests in certain subsidiaries that own leasehold
        interests in projects subject to sale-leaseback financing arrangements.
        In connection with these divestitures, the company recognized gain
        within its income statement in the period in which the sale was
        completed. Management believes that it is appropriate to exclude such
        gain from the company's non-GAAP financial measures as it is not
        reflective of ongoing operating results.
    --  Litigation: We may be involved in various instances of litigation,
        claims and proceedings that result in payments or recoveries. We exclude
        gains or losses associated with such events because the gains or losses
        do not reflect our underlying financial results in the period incurred.
        We also exclude all expenses pertaining to litigation relating to
        businesses that discontinued as a result of spin-off of Maxeon Solar,
        for which we are indemnifying them. Management believes that it is
        appropriate to exclude such charges from our non-GAAP results as they
        are not reflective of ongoing operating results.
    --  Transaction-related costs: In connection with material non-recurring
        transactions such as acquisition or divestiture of a business, the
        company incurred transaction costs including legal and accounting fees.
        Management believes that it is appropriate to exclude these costs from
        the company's non-GAAP results as it is not reflective of ongoing
        operating results.
    --  Business reorganization costs: In connection with the reorganization of
        our business into an upstream and downstream, and subsequent
        announcement of the separation transaction to separate the Company into
        two independent, and publicly traded companies, we incurred and expect
        to continue to incur in upcoming quarters, non-recurring charges on
        third-party legal and consulting expenses to close the separation
        transaction. Management believes that it is appropriate to exclude these
        from company's non-GAAP results as it is not reflective of ongoing
        operating results.
    --  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 charges (credits): 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. 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.
        Management believes that it is appropriate to exclude these from
        company's non-GAAP results as it is not reflective of ongoing operating
        results.
    --  Gain on convertible debt repurchased: In connection with the early
        repurchase of a portion of our 0.875% Convertible debentures due June 1,
        2021, we recognized a gain, represented by the difference between the
        book value of the convertible debentures, net of the remaining
        unamortized discount prior to repurchase and the reacquisition price of
        the convertible notes upon repurchase. Management believes that it is
        appropriate to exclude these from our non-GAAP results as it is not
        reflective of ongoing operating results.
    --  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,
        or tax impact of non-recurring items.
    --  Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in
        addition to adjustments described above, the company excludes the impact
        of the following items during the period:
        --  Cash interest expense, net of interest income
        --  Provision for income taxes
        --  Depreciation

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



                                                                                                         January 3,                                                 September 27, 2020                                            December 29, 2019                                                 January 3,                                           December 29,
                                                                                                               2021                                                                                                                                                                        2021                                                      2019




     GAAP revenue                                                                                                    $
              341,810                                                                                                              $
              274,806                                                              $
              401,617                                $
          1,124,829  $
           1,092,226



     Adjustments based on IFRS:



     Legacy utility and power plant projects                                                                                                                                                                                                                                                                                                       (207)                        (259)



     Legacy sale-leaseback transactions                                                                                                                                                                                                                                          (44)                                                                                            (44)



     Other adjustments:



     Construction revenue on solar services contracts                                                                                                                                                                                                                           3,235                                                               5,392                       128,144




     Non-GAAP revenue                                                                                                $
              341,810                                                                                                              $
              274,806                                                              $
              404,808                                $
          1,130,014  $
           1,220,067








     
                Adjustments to Gross Profit (Loss) / Margin:




                                                                                                                                                    
              
                THREE MONTHS ENDED                                                                                                                       TWELVE MONTHS ENDED



                                                                                                         January 3,                                                 September 27, 2020                                            December 29, 2019                                                 January 3,                                           December 29,
                                                                                                               2021                                                                                                                                                                        2021                                                      2019




     GAAP gross profit from continuing operations                                                                     $
              75,151                                                                                                               $
              37,140                                                               $
              86,074                                  $
          167,127    $
           163,478



     Adjustments based on IFRS:



     Legacy utility and power plant projects                                                                                                                                                                                                                                                                                                        (34)                          993



     Legacy sale-leaseback transactions                                                                                                                                                                                                                                          (75)                                                                 20                       (4,763)



     Other adjustments:



     Construction revenue on solar service contracts                                                                                                                                                                                                                            1,966                                                               4,735                        20,018



     Loss on sale and impairment of residential lease assets                                                 (485)                                                                               (469)                                                                          (435)                                                            (1,860)                      (1,703)



     Stock-based compensation expense                                                                          959                                                                                  623                                                                           1,020                                                               2,612                         2,390



     Amortization of intangible assets                                                                                                                                                           1,189                                                                           1,783                                                               4,757                         7,135



     Litigation                                                                                                                                                                                                                                                                   709                                                                                              709



     Impairment of property, plant and equipment                                                               567                                                                                                                                                                                                                                    567



     Restructuring (credits) charges                                                                          (12)                                                                                                                                                                                                                                  (12)



     Non-GAAP gross profit                                                                                            $
              76,180                                                                                                               $
              38,483                                                               $
              91,042                                  $
          177,912    $
           188,257






     GAAP gross margin (%)                                                                         22.0
            %                                                                      13.5
            %                                                                           21.4
                                                                                                                                                                                                                                                                                     %                                                     14.9
            %               15.0
            %



     Non-GAAP gross margin (%)                                                                     22.3
            %                                                                      14.0
            %                                                                           22.5
                                                                                                                                                                                                                                                                                     %                                                     15.7
            %               15.4
            %







     
                Adjustments to Net Income (Loss):




                                                                                                                                                    
              
                THREE MONTHS ENDED                                                                                                                       TWELVE MONTHS ENDED



                                                                                                         January 3,                                                 September 27, 2020                                            December 29, 2019                                                 January 3,                                           December 29,
                                                                                                               2021                                                                                                                                                                        2021                                                      2019



      GAAP net income from continuing operations attributable to
       stockholders                                                                                                   $
              412,475                                                                                                              $
              109,450                                                               $
              47,360                                  $
          599,355    $
           206,820



     Adjustments based on IFRS:



     Legacy utility and power plant projects                                                                                                                                                                                                                                                                                                        (34)                          993



     Legacy sale-leaseback transactions                                                                                                                                                                                                                                          (75)                                                                 20                         5,680



     Mark-to-market gain on equity investments                                                           (416,456)                                                                           (155,431)                                                                       (28,250)                                                          (690,818)                    (156,345)



     Other adjustments:



     Construction revenue on solar service contracts                                                                                                                                                                                                                            1,966                                                               4,735                       (7,012)



     Gain on sale and impairment of residential lease assets                                                 (693)                                                                                (83)                                                                        (3,366)                                                            (1,815)                       25,636



     Litigation                                                                                              3,650                                                                                  395                                                                             714                                                               4,530                           714



     Stock-based compensation expense                                                                        6,167                                                                                4,454                                                                           6,118                                                              19,554                        19,800



     Amortization of intangible assets                                                                                                                                                           1,189                                                                           1,783                                                               4,759                         7,135



     Gain on business divestiture                                                                               53                                                                                                                                                                                                                               (10,476)                    (143,400)



     Transaction-related costs                                                                                 177                                                                                                                                                               1,723                                                               2,040                         5,294



     Business reorganization costs                                                                           1,537                                                                                                                                                                                                                                  1,537



     Non-cash interest expense                                                                                                                                                                                                                                                      3                                                                                                3



     Restructuring (credits) charges                                                                         (146)                                                                                (97)                                                                          8,039                                                               1,992                        14,110



     Gain on convertible debt repurchased                                                                      540                                                                                (104)                                                                                                                                           (2,520)



     Impairment of property, plant and equipment                                                               567                                                                                                                                                                                                                                    567



     Tax effect                                                                                             18,700                                                                               33,769                                                                             385                                                              54,314                         2,202




     Non-GAAP net loss attributable to stockholders                                                                   $
              26,571                                                                                                              $
              (6,458)                                                              $
              36,400                                 $
          (12,260)  $
           (18,370)








     
                Adjustments to Net Income (loss) per diluted share




                                                                                                                                                    
              
                THREE MONTHS ENDED                                                                                                                       TWELVE MONTHS ENDED



                                                                                                         January 3,                                                 September 27, 2020                                            December 29, 2019                                                 January 3,                                           December 29,
                                                                                                               2021                                                                                                                                                                                                                                 2019
                                                                                                                                                                                                                                                                                          2021




     Net income (loss) per diluted share



     
                Numerator:



     GAAP net income available to common stockholders(1)                                                             $
              412,475                                                                                                              $
              109,450                                                               $
              47,360                                  $
          599,355    $
           206,820


      Add: Interest expense on 4.00% debenture due 2023, net of tax                                           3,126                                                                                3,358                                                                           3,358                                                              12,499                        13,430


      Add: Interest expense on 0.875% debenture due 2021, net of tax                                            421                                                                                  467                                                                             691                                                               1,824                         2,765



     GAAP net income available to common stockholders(1)                                                             $
              416,022                                                                                                              $
              113,275                                                               $
              51,409                                  $
          613,678    $
           223,015





      Non-GAAP net income (loss) available to common stockholders(1)                                                   $
              26,571                                                                                                              $
              (6,458)                                                              $
              36,400                                 $
          (12,260)  $
           (18,370)






     
                Denominator:



     GAAP weighted-average shares                                                                          170,267                                                                              170,113                                                                         152,439                                                             169,801                       144,796



     Effect of dilutive securities:



     Restricted stock units                                                                                  5,216                                                                                3,560                                                                           3,565                                                                 318                         2,729



     0.875% debentures due 2021                                                                              7,581                                                                                7,785                                                                           8,203                                                              10,055                         8,203



     4.00% debentures due 2023                                                                              17,068                                                                               17,068                                                                          13,922                                                              17,068                        13,922



     GAAP dilutive weighted-average common shares:                                                         200,132                                                                              198,526                                                                         178,129                                                             197,242                       169,650






     Non-GAAP weighted-average shares                                                                      170,267                                                                              170,113                                                                         152,439                                                             169,801                       144,796



     Effect of dilutive securities:



     Restricted stock units                                                                                  5,216                                                                                                                                                               3,565



     4.00% debentures due 2023                                                                              17,068



     Non-GAAP dilutive weighted-average common shares(1)                                                   192,551                                                                              170,113                                                                         156,004                                                             169,801                       144,796





      GAAP dilutive net income per share -continuing operations                                                          $
              2.08                                                                                                                 $
              0.57                                                                 $
              0.29                                     $
          3.11       $
           1.31


      Non-GAAP dilutive net income (loss) per share - continuing
       operations                                                                                                        $
              0.14                                                                                                               $
              (0.04)                                                                $
              0.23                                   $
          (0.07)    $
           (0.13)





                   (1)In accordance with the if-converted method, net loss available to common stockholders excludes interest expense related to the 0.875% and 4.0% debentures if the debentures are considered converted in the calculation of net 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 loss per diluted share.







     
                Adjusted EBITDA:




                                                                                                                                                    
              
                THREE MONTHS ENDED                                                                                                                       TWELVE MONTHS ENDED



                                                                                                         January 3,                                                 September 27, 2020                                            December 29, 2019                                                 January 3,                                        December 29, 2019
                                                                                                               2021                                                                                                                                                                        2021



      GAAP net income (loss) from continuing operations attributable to
       stockholders                                                                                                   $
              412,475                                                                                                              $
              109,450                                                               $
              47,360                                  $
          599,355    $
           206,820



     Adjustments based on IFRS:



     Legacy utility and power plant projects                                                                                                                                                                                                                                                                                                        (34)                          993



     Legacy sale-leaseback transactions                                                                                                                                                                                                                                          (75)                                                                 20                         5,680



     Mark-to-market gain on equity investments                                                           (416,456)                                                                           (155,431)                                                                       (28,250)                                                          (690,818)                    (156,345)



     Other adjustments:



     Construction revenue on solar service contracts                                                                                                                                                                                                                            1,966                                                               4,735                       (7,012)


      (Gain) loss on sale and impairment of residential lease assets                                          (693)                                                                                (83)                                                                        (3,366)                                                            (1,815)                       25,636



     Litigation                                                                                              3,650                                                                                  395                                                                             714                                                               4,530                           714



     Stock-based compensation expense                                                                        6,167                                                                                4,454                                                                           6,118                                                              19,554                        19,800



     Amortization of intangible assets                                                                                                                                                           1,189                                                                           1,783                                                               4,759                         7,135



     Gain on business divestiture                                                                               53                                                                                                                                                                                                                               (10,476)                    (143,400)



     Transaction-related costs                                                                                 177                                                                                                                                                               1,723                                                               2,040                         5,294



     Business reorganization costs                                                                           1,537                                                                                                                                                                                                                                  1,537



     Non-cash interest expense                                                                                                                                                                                                                                                      3                                                                                                3



     Restructuring (credits) charges                                                                         (146)                                                                                (97)                                                                          8,039                                                               2,592                        14,110



     Gain on convertible debt repurchased                                                                      540                                                                                (104)                                                                                                                                           (2,520)



     Impairment of property, plant and equipment                                                               567                                                                                                                                                                                                                                    567



     Cash interest expense, net of interest income                                                           8,350                                                                                6,918                                                                           8,263                                                              32,452                        33,954



     Provision for income taxes                                                                             18,834                                                                               36,725                                                                           6,435                                                              57,550                        16,509



     Depreciation                                                                                            3,519                                                                                5,156                                                                           6,133                                                              16,108                        29,049



     Adjusted EBITDA                                                                                                  $
              38,574                                                                                                                $
              8,572                                                               $
              56,846                                   $
          40,136     $
           58,940


                            Q1 2021 GUIDANCE

                            (in thousands)                            Q1 2021


               Revenue (GAAP and Non-GAAP)       
              $270,000-$330,000



              Net income (GAAP)               
              $(20,000)-$(10,000)



              Adjusted EBITDA1                    
              $10,000-$20,000



              1.               Estimated Adjusted EBITDA amount
                                 above for Q1 2021 includes net
                                 adjustments that decrease net
                                 income by approximately $7 million
                                 related to stock-based
                                 compensation expense, $11 million
                                 related to restructuring and
                                 related charges, $8 million
                                 related to interest expense, $2
                                 million related to depreciation
                                 expense, and $2 million related to
                                 income taxes.


                                                                                                                                                                                                                                                                                                                                                                                              
             
                SUPPLEMENTAL DATA

                                                                                                                                                                                                                                                                                                                                                                                          
         
                (In thousands, except percentages)





     The following supplemental data represent the adjustments 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




                                                                                                                                                                                                                                                                                                                      
       January 3, 2021



                                                                                                           
              Revenue                                                                                                                                                
              Gross Profit / Margin                                                        
     Operating expenses



                                                    Residential,                                                             Commercial
                                                                                                                                 and                                                                Others                                         Intersegment                                       Residential,                            Commercial               Others                    Intersegment                                Research                   Sales,             Restructuring                    (Gain)/loss           Gain on               Other       Provision               Net income
                                                                                                                                                                                                                                                                                                                                          and                                                                                                                  general                 charges
                                                        Light                                                                Industrial
                                                                                                                              Solutions                                                                                                            eliminations                                           Light                                                                                  eliminations                                  and                                                                          on sale and           business             income          for                    (loss)
                                                Commercial                                                                                                                                                                                                                                                                                    Industrial                                                                                                      
              and                                                                                                                          attributable
                                                                                                                                                                                                                                                                                                     Commercial                                                                                                                          development        administrative                                                 impairment         divestiture          (expense),      income
                                                                                                                                                                                                                                                                                                                                            Solutions                                                                                                                                                                                                            net          taxes                 
             to
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         stockholders
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          residential
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    lease assets

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    ---

                          GAAP                                     $
              
                257,932                                                     $
              
                79,547                                               $
              
                9,959                                               $
       
           (5,628)                   $
     
     61,128                      $
         
                13,559                                     $
              
            (5,300)                            $
              
             5,764                                                                                                                                   $
     
     412,475



     Adjustments based on IFRS:


      Mark-to-market gain on
       equity investments                                      -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             (416,456)                          (416,456)



     Other adjustments:


      (Gain)/loss on sale and
       impairment of residential
       lease assets                                            -                                                                                                                                                                                                                                             (485)                                                                                                                                                                                                                                                                        (208)                                                                     (693)



     Litigation                                               -                                                                                                                                                                                                                                                                                                                                                                                                                                 3,650                                                                                                                                        3,650


      Stock-based compensation
       expense                                                 -                                                                                                                                                                                                                                               952                                      7                                                                                             904                                             4,304                                                                                                                                          6,167


      Gain on business
       divestiture                                             -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                124                     (71)                         53


      Business reorganization
       costs                                                   -                                                                                                                                                                                                                                                                                                                                                                                                                                            1,537                                                                                                                                 1,537


      Transaction-related costs                                -                                                                                                                                                                                                                                                                                                                                                                                                                                            177                                                                                                                                   177


      Restructuring (credits)
       charges                                                 -                                                                                                                                                                                                                                              (12)                                                                                                                                                                                                                                         (134)                                                                                                    (146)


      Gain on convertible debt
       repurchased                                             -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   540                                 540


      Impairment of property,
       plant and equipment                                     -                                                                                                                                                                                                                                                                                     567                                                                                                                                                                                                                                                                                                               567



     Tax effect                                               -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       18,700                   18,700



                   Non-GAAP                                        $
              
                257,932                                                     $
              
                79,547                                               $
              
                9,959                                               $
       
           (5,628)                   $
     
     61,583                      $
         
                14,133                                     $
              
            (5,300)                            $
              
             5,764                                                                                                              $
     
              26,571


                                                                                                                                                           
            September 27, 2020



                                                               
     Revenue                                                       
     Gross Profit / Margin                                                                   
              Operating expenses



                                     Residential,                       Commercial
                                                                            and                Others Intersegment                  Residential,                                         Commercial             Others Intersegment                             Research           Sales,                Restructuring                 (Gain)/loss         Gain on             Other       Provision         Net income
                                                                                                                                                                                       and                                                                                    general                  charges                                                                          for
                                         Light                          Industrial
                                                                         Solutions                    eliminations                      Light                                                                          eliminations                               and                                                                  on sale and         business           income                            (loss)
                                 Commercial                                                                                                                                              Industrial                                                                       
              and                                                                                                    income     attributable
                                                                                                                                     Commercial                                                                                                               development administrative                                                impairment       divestiture        (expense), taxes
                                                                                                                                                                                         Solutions                                                                                                                                                                        net                          
              to
                                                                                                                                                                                                                                                                                                                                 
              of
                                                                                                                                                                                                                                                                                                                                                                                                             stockholders
                                                                                                                                                                                                                                                                                                                                       residential
                                                                                                                                                                                                                                                                                                                                 lease assets



                          GAAP                    $
     
     197,710                     $
     
     74,333                     $
     
     10,056                        $
     
       (7,293)                                $
     
     34,625                           $
              
     3,931                             $
     
     (3,168)                        $
             
             1,752                                                                                                               $
     
     109,450


      Adjustments based on IFRS:


      Mark-to-market gain on
       equity investments                                                                                                                                                                                                                                                                                                                                                                                                 (155,431)                    (155,431)


      Other adjustments:


      (Gain)/loss on sale and
       impairment of residential
       lease assets                                                                                                                        (469)                                                                                                                                                                                                                                                   386                                                       (83)



     Litigation                                                                                                                                                                                                                                                                                                       395                                                                                                                 395


      Stock-based compensation
       expense                                                                                                                               623                                                                                                                                                                        3,831                                                                                                               4,454


      Amortization of intangible
       assets                                                                                                                                                                                 1,189                                                                                                                                                                                                                                                         1,189


      Restructuring charges                                                                                                                                                                                                                                                                                                                                          (97)                                                                               (97)


      Gain on convertible debt
       repurchased                                                                                                                                                                                                                                                                                                                                                                                                            (104)                        (104)



     Tax effect                                                                                                                                                                                                                                                                                                                                                                                                                    33,769             33,769



                   Non-GAAP                       $
     
     197,710                     $
     
     74,333                     $
     
     10,056                        $
     
       (7,293)                                $
     
     34,779                           $
              
     5,120                             $
     
     (3,168)                        $
             
             1,752                                                                                          $
     
             (6,458)


                                                                                                                                                                
        December 29, 2019



                                                               
     Revenue                                                      
         Gross Profit / Margin                                                        
       Operating expenses



                                     Residential,                        Commercial      Others            Intersegment         Residential,                                         Commercial        Others                       Intersegment        Research                 Sales,               Restructuring                      Loss
                                                                             and                                                                                                                                                                                                                                                            on               Other             Benefit        Equity in             Gain                   Net income
                                                                                                                                                                                   and                                                                                      general                 charges                                                                 from        earnings of
                                         Light                           Industrial
                                                                          Solutions                        eliminations             Light                                                                                           eliminations          and                                                                          sale and             income                                                 (Loss)                    (loss)
                                 Commercial                                                                                                                                          Industrial                                                                                    and                                                                                         income       unconsolidated attributable              attributable
                                                                                                                                 Commercial                                                                                                           development       administrative                                                impairment          (expense),       taxes
                                                                                                                                                                                     Solutions                                                                                                                                                           net                                  investees           to non-                      to
                                                                                                                                                                                                                                                                                                                                          of
                                                                                                                                                                                                                                                                                                                                                                                                                controlling               stockholders
                                                                                                                                                                                                                                                                                                                                      residential
                                                                                                                                                                                                                                                                                                                                lease assets                                                                     interests



                          GAAP                    $
     
     253,483                      $
     
            87,538 $
     
                78,072                     $
          
     (17,476)                              $
     
            41,120                               $
        
              162                 $
     
     11,511                          $
             
             33,281                                                                                                                                       $
     
     47,360


      Adjustments based on IFRS:


      Legacy sale-leaseback
       transactions                          (44)                                                                                       (75)                                                                                                                                                                                                                                                                                                                                            (75)


      Mark-to-market gain on
       equity investments                                                                                                                                                                                                                                                                                                                                                                                                   (29,250)                       1,000                     (28,250)


      Other adjustments:


      (Gain)/loss on sale and
       impairment of residential
       lease assets                                                                                                                    (435)                                                                                                                                                                                                                                                       (2,931)                                                                           (3,366)


      Construction revenue on
       solar services contracts             3,235                                                                                       1,966                                                                                                                                                                                                                                                                                                                                            1,966



     Litigation                                                                                                                         709                                                                                                                                                                             5                                                                                                                                               714


      Stock-based compensation
       expense                                                                                                                         1,020                                                                                                                                                                           5,098                                                                                                                                             6,118


      Amortization of intangible
       assets                                                                                                                                                                             1,783                                                                                                                                                                                                                                                                                         1,783


      Transaction-related costs                                                                                                                                                                                                                                                                                     1,723                                                                                                                                             1,723


      Non-cash interest expense                                                                                                                                                                 3                                                                                                                                                                                     3


      Restructuring charges                                                                                                                                                                                                                                                                                                                                          8,039                                                                                                          8,039



     Tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                       385                            385



                   Non-GAAP                       $
     
     256,674                      $
     
            87,538 $
     
                78,072                     $
          
     (17,476)                              $
     
            44,305                             $
        
              1,945                 $
     
     11,511                          $
             
             33,281                                                                                                         $
     
            36,400


                                                                                                                                                                             
              
             TWELVE MONTHS ENDED




                                                                                                                                                                                     
           January 3, 2021



                                                               
     Revenue                                                           
              Gross Profit / Margin                                                                       
             Operating expenses



                                     Residential,                        Commercial and      Others             Intersegment        Residential,                                 Commercial                                     Others Intersegment                             Research               Sales,                 Restructuring                      (Gain)/loss          Gain on              Other        Benefit           Equity in                     Gain                     Net income
                                                                                                                                                                               and                                                                                                                general                   charges                                                                                 from           earnings of
                                         Light                             Industrial
                                                                            Solutions                           eliminations            Light                                                                                          eliminations                               and                                                                            on sale and          business            income                                                       (Loss)                      (loss)
                                 Commercial                                                                                                                                      Industrial                                                                                                   
              and                                                                                                            income         unconsolidated          attributable                attributable
                                                                                                                                     Commercial                                                                                                                               development     administrative                                                     impairment         divestiture         (expense), taxes
                                                                                                                                                                                 Solutions                                                                                                                                                                                                            net                                 investees                   to non-             
              to
                                                                                                                                                                                                                                                                                                                                                          
              of
                                                                                                                                                                                                                                                                                                                                                                                                                                                                    controlling                 stockholders
                                                                                                                                                                                                                                                                                                                                                                 residential
                                                                                                                                                                                                                                                                                                                                                           lease assets                                                                                              interests



                   GAAP                           $
     
     842,681                          $
     
            255,018 $
     
                65,574                    $
              
     (38,444)                               $
             
     150,596                          $
              
     23,368                                 $
     
     (24,205)                            $
             
              17,368                                                                                                                                                                      $
     
     599,355


      Adjustments based on IFRS:


      Legacy utility and power
       plant projects                                                             (207)                                                                                                (34)                                                                                                                                                                                                                                                                                                                                                       (34)


      Legacy sale-leaseback
       transactions                                                                                                                           20                                                                                                                                                                                                                                                                                                                                                                                                     20


      Mark-to-market gain on
       equity investments                                                                                                                                                                                                                                                                                                                                                                                                                                                       (690,818)                                                    (690,818)


      Other adjustments:


      (Gain)/loss on sale and
       impairment of residential
       lease assets                                                                                                                      (1,860)                                                                                                                                                                                                                                                                                45                                                                                                              (1,815)


      Construction revenue on
       solar services contracts             5,392                                                                                           4,735                                                                                                                                                                                                                                                                                                                                                                                                  4,735



     Litigation                                                                                                                                                                                                                                                                                                                               4,530                                                                                                                                                                              4,530


      Stock-based compensation
       expense                                                                                                                             2,605                                           7                                                                                              904                                           16,038                                                                                                                                                                                        19,554


      Amortization of intangible
       assets                                                                                                                                                                         4,759                                                                                                                                                                                                                                                                                                                                                       4,759


      Gain on business
       divestiture                                                                                                                                                                                                                                                                                                                                                                                                                                    (10,334)                      (142)                                                     (10,476)


      Business reorganization
       costs                                                                                                                                                                                                                                                                                                                                     1,537                                                                                                                                                                              1,537


      Gain on convertible notes
       repurchased                                                                                                                                                                                                                                                                                                                                                                                                                                                                (2,520)                                                      (2,520)


      Transaction-related costs                                                                                                                                                                                                                                                                                                                2,040                                                                                                                                                                              2,040


      Restructuring (credits)
       charges                                                                                                                              (12)                                                                                                                                                                                                                                                2,004                                                                                                                                             1,992


      Impairment of property,
       plant and equipment                                                                                                                                                              567                                                                                                                                                                                                                                                                                                                                                         567



     Tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             54,314                          54,314



                   Non-GAAP                       $
     
     848,073                          $
     
            254,811 $
     
                65,574                    $
              
     (38,444)                               $
             
     156,084                          $
              
     28,667                                 $
     
     (24,205)                            $
             
              17,368                                                                                                                                 $
     
     (12,260)


                                                                                                                                                                                 
             December 29, 2019



                                                               
     Revenue                                                            
              Gross Profit / Margin                                                                           
        Operating expenses



                                     Residential,                        Commercial and      Others              Intersegment        Residential,                               Commercial                                 Others Intersegment                                 Research           Sales,                  Restructuring                    (Gain)/loss           Gain on               Other        Benefit           Equity in                       Gain                     Net income
                                                                                                                                                                              and                                                                                                            general                    charges                                                                                 from           earnings of
                                         Light                             Industrial
                                                                            Solutions                            eliminations            Light                                                                                    eliminations                                   and                                                                       on sale and           business             income                                                         (Loss)                      (loss)
                                 Commercial                                                                                                                                     Industrial                                                                                               
              and                                                                                                             income         unconsolidated           attributable                 attributable
                                                                                                                                      Commercial                                                                                                                             development administrative                                                    impairment          divestiture          (expense), taxes
                                                                                                                                                                                Solutions                                                                                                                                                                                                         net                                 investees                     to non-             
              to
                                                                                                                                                                                                                                                                                                                                                               of
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  controlling                 stockholders
                                                                                                                                                                                                                                                                                                                                                           residential
                                                                                                                                                                                                                                                                                                                                                     lease assets                                                                                                  interests



                          GAAP                    $
     
     735,753                          $
     
            243,570 $
     
                156,615                    $
              
     (43,712)                                $
      
      92,083                       $
           
                (981)                             $
      
      39,569                           $
             
              32,807                                                                                                                                                                                     $
     
     206,820


      Adjustments based on IFRS:


      Legacy utility and power
       plant projects                                                             (259)                                                                                                993                                                                                                                                                                                                                                                                                                                                                                   993


      Legacy sale-leaseback
       transactions                          (44)                                                                                         (4,763)                                                                                                                                                                                                                                                                                                                                10,443                                                                    5,680


      Mark-to-market gain on
       equity investments                                                                                                                                                                                                                                                                                                                                                                                                                                                     (157,345)                          1,000                                 (156,345)


      Other adjustments:


      (Gain)/loss on sale and
       impairment of residential
       lease assets                                                                                                                       (1,703)                                                                                                                                                                                                                                                                       33,779                                                                                         (6,440)                            25,636


      Construction revenue on
       solar services contracts           128,144                                                                                           20,018                                                                                                                                                                                                                                                                                                                                                                     (27,030)                           (7,012)



     Litigation                                                                                                                              709                                                                                                                                                                                            5                                                                                                                                                                                                  714


      Stock-based compensation
       expense                                                                                                                              2,390                                                                                                                                                                                         17,410                                                                                                                                                                                               19,800


      Amortization of intangible
       assets                                                                                                                                                                        7,135                                                                                                                                                                                                                                                                                                                                                                 7,135


      Gain on business
       divestiture                                                                                                                                                                                                                                                                                                                                                                                                                                (143,400)                                                                                           (143,400)


      Transaction-related costs                                                                                                                                                                                                                                                                                                         5,294                                                                                                                                                                                                5,294


      Non-cash interest expense                                                                                                                                                                                                                                                                                                             3                                                                                                                                                                                                    3


      Restructuring charges                                                                                                                                                                                                                                                                                                                                                                14,110                                                                                                                                                     14,110



     Tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           2,202                                       2,202



                   Non-GAAP                       $
     
     863,853                          $
     
            243,311 $
     
                156,615                    $
              
     (43,712)                               $
      
      108,734                       $
           
                7,147                              $
      
      39,569                           $
             
              32,807                                                                                                                                                  $
     
     (18,370)

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SOURCE SunPower Corp.