SunPower Corp. recently announced financial results for its third quarter.
Third Quarter Highlights
– Grew year-over-year Distributed Generation volume by approximately 15 percent, U.S. residential strength
– Next Generation Technology ramped on plan to achieve volume production in fourth quarter 2018
– Received Section 201 tariff exemption for industry-leading interdigitated back contact cell and module technology
– Closed acquisition of SolarWorld Americas assets on October 1 to increase U.S. manufacturing presence
"In the third quarter we achieved our Adjusted EBITDA target, continued to execute on our strategic initiatives, received our section 201 technology exclusion and positioned the company for sustained profitability," stated Tom Werner, SunPower CEO and chairman of the board. "Demand in our global DG business remained strong with sequential and year-over-year volume growth. In particular, our U.S. residential business exceeded our forecasts while our commercial business booked a number of large scale, multi-site enterprise deals with customers including Walmart. We also saw strong bookings in our SunPower Solutions group through our third quarter financial performance was affected by certain international project delays which led to lower-than-expected Performance Series panel shipments and revenue for that group in the quarter.
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"We also continued to make solid progress on our corporate transformation efforts during the quarter. Over the last year, we have successfully simplified our business model, delivered our balance sheet through asset sales and reduced operating expenses. Additionally, we have focused our investments in those areas that we believe offer the best opportunities for growth including our industry leading NGT cell and panel technology, solar-plus-storage solutions for our DG business, our digital platform to improve customer service and satisfaction, as well our energy services offerings.
We also made the strategic decision to re-segment our business into an upstream and downstream structure to focus our downstream efforts on our leading U.S. DG business while growing global sales of our upstream solar panel business through our SunPower Solutions group. We believe that these initiatives, when completed by the first quarter of 2019, will improve transparency, unlock shareholder value and enable the company to regain profitability in 2019.
"We also achieved our manufacturing cost reduction targets for the quarter and our Fabs remain 100 percent utilized. The ramp of our NGT technology remains on plan as we began volume production in Fab 3 this quarter. Additionally, we were pleased to close our acquisition of SolarWorld Americas assets, which will allow us to increase our manufacturing footprint in the U.S. Domestic production of our proprietary P-Series technology will allow us to expand our DG product offering in the U.S., maintaining our leadership position in the market," concluded Werner.
"We continued to execute on our financial plan as demand for our industry-leading DG solutions, combined with our expense management focus, enabled us to meet our Adjusted EBITDA target for the quarter," added Manavendra Sial, SunPower chief financial officer. "We also made significant progress on our asset monetization strategy as we completed the sale of our microinverter business as well as our North American power plant development pipeline during the quarter. Additionally, the sale of our residential lease portfolio remains on plan. We expect to close the final phase of this transaction by the first quarter of next year, further simplifying our financial statements while delivering our balance sheet. With our DG-focused strategy, continued investment in our industry-leading technology and prudent expense control, we are well positioned to achieve our financial goals for 2018 while positioning the company for sustained profitability next year."
Third quarter fiscal year 2018 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $48.9 million, including, $50.7 million related to impairment of residential lease assets, $20.9 million related to acquisition and other costs, $14.6 million related to cost of above-market polysilicon, $6.4 million related to stock-based compensation expense, $6.2 million related to unrealized loss on equity investments, $3.9 million related to restructuring expense, $2.3 million related to sale-leaseback transactions, $2.1 million related to intangibles, and $0.9 million related to tax effect, partially offset by $59.3 million related to the gain on business divestiture.
The company's fourth quarter and fiscal year 2018 GAAP and non-GAAP guidance includes the impact of the following: the company's recent asset acquisition of SolarWorld Americas, tariff payments related to the section 201 trade action for tariffed product already in inventory, as well as the delay of certain third and fourth quarter international P-Series equipment sales projects in its SunPower Solutions group.
The company's fourth quarter GAAP guidance is as follows: revenue of $460 million to $510 million, gross margin of 2 percent to 4 percent and a net loss of $165 million to $135 million. On a non-GAAP basis, the company expects revenue of $510 million to $610 million, gross margin of 6 percent to 8 percent, Adjusted EBITDA of $0 million to $20 million and megawatts deployed in the range of 425 MW to 475 MW. Fourth quarter 2018 GAAP and non-GAAP guidance includes the impact of approximately $20 million related to the section 201 tariff action.
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