SUNPOWER CORPORATION SAN JOSE, Calif., May 5, 2016 /PRNewswire/ -- SunPower Corp. (NASDAQ: SPWR) today announced financial results for its first quarter ended April 3, 2016.
http://photos.prnewswire.com/prnvar/20150713/235415LOGO
($
Millions,
except
percentages
and per-
share
data) 1st Quarter 4th Quarter 1st Quarter
2016 2015 2015
--- ---- ---- ----
GAAP
revenue $384.9 $374.4 $440.9
-------- ------ ------ ------
GAAP gross
margin 13.4% 5.4% 20.6%
---------- ---- --- ----
GAAP net
loss ($85.4) ($127.6) ($9.6)
-------- ------ ------- -----
GAAP net
loss per
diluted
share ($0.62) ($0.93) ($0.07)
--------- ------ ------ ------
Non-GAAP
revenue(1) $433.6 $1,363.9 $430.6
----------- ------ -------- ------
Non-GAAP
gross
margin(1) 13.6% 28.8% 20.5%
---------- ---- ---- ----
Non-GAAP
net income
(loss)(1) ($41.2) $270.4 $19.7
----------- ------ ------ -----
Non-GAAP
net income
(loss) per
diluted
share(1) ($0.30) $1.73 $0.13
----------- ------ ----- -----
EBITDA(1) $6.3 $379.9 $58.8
-------- ---- ------ -----
(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.
"Our first quarter results reflect solid execution against our long term strategy," said Tom Werner, SunPower president and CEO. "With the recent launch of our Helix(TM) and SunPower Equinox(TM) complete solutions for the commercial and residential markets respectively, we are now in a position to offer standardized plug and play solutions across all primary solar applications from large scale power plants to individual homes and businesses. This positions SunPower very well to facilitate the adoption of solar power as a mainstream energy technology. In our upstream solar cell and panel manufacturing operations, we delivered strong yields and record panel output, and we continue to ramp volume at our new Fab 4 cell manufacturing facility. During the quarter, we also began commercial shipments of our new, lower cost, high efficiency Performance Series panel product line and we are on track to ramp volume significantly starting in the third quarter.
"In our power plant business, consistent with our strong, historical delivery execution, we continued construction on a number of key U.S. projects slated for completion during the second half of 2016, including our 100-megawatt (MW) project for NV Energy, the 102-MW Henrietta power plant and our 68-MW project for Stanford University. Additionally, we achieved commercial operation on our 50-MW Hooper project for Xcel Energy, a project currently owned by 8point3 Energy Partners. SunPower also achieved notable international success during the first quarter when we were awarded approximately 500-MW of power purchase agreements in Mexico's first electricity auction. This award comprised approximately 25 percent of the awarded solar capacity, or around 20 percent of the entire awarded energy across all resources, and demonstrates the increasing cost competitiveness of wholesale solar power versus competing technologies. We also expect to begin construction of our second solar power plant project in Chile later this year with a capacity of approximately 100-MW. With a pipeline of more than 2.5 gigawatts (GW) in Latin America and more than 14-GW globally, we see significant long term opportunity in the power plant segment.
"Our residential business continued its strong performance as we met or exceeded our quarterly goals across all regions. In North America, we grew recognized megawatts by more than 50 percent year over year, gained market share, and launched our SunPower Equinox complete residential solution in the U.S. We believe this fully integrated product generates up to 70 percent more lifetime energy with 70 percent fewer visible components compared with a conventional residential system, while reducing installation time and improving quality and aesthetics. We also added a key residential channel partnership during the quarter including an exclusive co-marketing agreement with AT&T. With solid residential industry fundamentals, particularly in the U.S, we expect continued strong performance in this segment during 2016.
"We also made significant progress in our commercial business during the quarter, adding projects to our pipeline which stands over $1 billion. The rollout of our new Helix platform is going very well as we installed our first commercial system during the quarter. As a result, we expect to double our commercial market share in the U.S. this year. Internationally, we also had a significant win in Japan during the quarter, where we booked a 17-MW supply contract with a leading Japanese commercial rooftop project developer," Werner concluded.
"Overall, we executed well in the first quarter as we achieved our development targets and saw solid performance across our segments," said Chuck Boynton, SunPower CFO. "We continued to add to our HoldCo asset base with a number of large projects scheduled for completion in the second half of the year. We exited the quarter with a strong balance sheet including significant liquidity through our $300 million revolver, which remains undrawn. In addition, we were pleased to close our most recent financing, a $200 million construction revolver that will be used to finance our anticipated growth, primarily in the commercial sector."
Additionally, first quarter fiscal 2016 non-GAAP results include net adjustments that, in the aggregate, decreased non-GAAP net loss by $44.2 million, including $10.7 million related to 8point3 Energy Partners, $3.6 million related to utility and power plant projects, $3.1 million related to sale of operating lease assets, $16.5 million related to stock-based compensation expense, $8.6 million related to other adjustments, and $1.7 million related to tax effect.
Financial Outlook
The company's second quarter fiscal 2016 non-GAAP guidance is as follows: revenue of $310 million to $360 million, gross margin of 12 percent to 14 percent, EBITDA of $0 to $25 million and megawatts deployed in the range of 360 MW to 385 MW. On a GAAP basis, the company expects revenue of $290 million to $340 million, gross margin of 10 percent to 12 percent and net loss of $90 million to $65 million. Second quarter 2016 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to real estate accounting.
For fiscal year 2016, the company's non-GAAP financial guidance is unchanged. Non-GAAP expectations are as follows: revenue of $3.2 billion to $3.4 billion, gross margin of 14 percent to 16 percent, EBITDA of $450 million to $500 million, capital expenditures of $210 million to $260 million and gigawatts deployed in the range of 1.6 GW to 1.9 GW.
On a GAAP basis, the company now expects 2016 revenue of $2.8 billion to $3.0 billion, gross margin of 13 percent to 15 percent and net income of $0 million to $50 million. Fiscal year 2016 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to real estate accounting.
The company will host a conference call for investors this afternoon to discuss its first quarter 2016 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at http://investors.sunpower.com/events.cfm.
This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its first quarter 2016 performance on the Events and Presentations section of the SunPower Investor Relations page at http://investors.sunpower.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on a direct current (dc) basis unless otherwise noted.
About SunPower
As one of the world's most innovative and sustainable energy companies, SunPower Corp. (NASDAQ: SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools and utilities around the globe rely on SunPower's more than 30 years of proven experience. From the first flip of the switch, SunPower delivers maximum value and performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, and North and South America. For more information about how SunPower is changing the way our world is powered, visit www.sunpower.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) our ability to facilitate the adoption of solar power; (b) the ramping of panel production; (c) construction, completion and delivery schedules; (d) expectations around our future opportunities, performance and market share across our business segments; (e) the expected performance of our SunPower Equinox integrated offering; (f) our project pipeline; (g) second quarter fiscal 2016 guidance, including non-GAAP revenue, gross margin, EBITDA, and MW deployed, as well as GAAP revenue, gross margin, and net loss; and (h) full year fiscal 2016 guidance, including non-GAAP revenue, gross margin, capital expenditures, and gigawatts deployed, as well as GAAP revenue, gross margin and net income. These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) competition in the industry and downward pressure on average selling prices; (2) our liquidity, substantial indebtedness, and ability to obtain additional financing for our projects and customers; (3) regulatory changes and the availability of economic incentives promoting use of solar energy; (4) challenges inherent in constructing certain of our large projects; (5) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (6) fluctuations in our operating results; (7) maintaining or increasing our manufacturing capacity, containing associated costs, and manufacturing difficulties that could arise; (8) challenges managing our joint ventures and partnerships; (9) challenges executing on our HoldCo and YieldCo strategies, including the risk that 8point3 Energy Partners may be unsuccessful; and (10) fluctuations or declines in the performance of our solar panels and other products and solutions. 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.
(C)2016 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, SUNPOWER EQUINOX, and HELIX are trademarks or registered trademarks of SunPower Corporation in the U.S. and other countries as well.
SUNPOWER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Apr. 3, Jan. 3,
2016 2016
---- ----
Assets
Current assets:
Cash and cash
equivalents $555,178 $954,528
Restricted cash and
cash equivalents,
current portion 24,572 24,488
Accounts receivable,
net 177,443 190,448
Costs and estimated
earnings in excess of
billings 56,503 38,685
Inventories 386,787 382,390
Advances to suppliers,
current portion 95,421 85,012
Project assets -
plants and land,
current portion 662,868 479,452
Prepaid expenses and
other current assets 415,128 359,517
------- -------
Total current assets 2,373,900 2,514,520
Restricted cash and
cash equivalents, net
of current portion 43,470 41,748
Restricted long-term
marketable securities 6,560 6,475
Property, plant and
equipment, net 802,944 731,230
Solar power systems
leased and to be
leased, net 561,534 531,520
Project assets -
plants and land, net
of current portion 5,900 5,072
Advances to suppliers,
net of current
portion 251,763 274,085
Long-term financing
receivables, net 378,802 334,791
Goodwill and other
intangible assets,
net 110,715 119,577
Other long-term assets 299,267 297,975
Total assets $4,834,855 $4,856,993
========== ==========
Liabilities and Equity
Current liabilities:
Accounts payable $530,178 $514,654
Accrued liabilities 283,502 313,497
Billings in excess of
costs and estimated
earnings 142,210 115,739
Short-term debt 63,348 21,041
Customer advances,
current portion 35,307 33,671
------ ------
Total current
liabilities 1,054,545 998,602
Long-term debt 498,197 478,948
Convertible debt 1,111,466 1,110,960
Customer advances, net
of current portion 119,423 126,183
Other long-term
liabilities 562,723 564,557
Total liabilities 3,346,354 3,279,250
--------- ---------
Redeemable
noncontrolling
interests in
subsidiaries 78,818 69,104
Equity:
Preferred stock - -
Common stock 138 137
Additional paid-in
capital 2,376,771 2,359,917
Accumulated deficit (833,026) (747,617)
Accumulated other
comprehensive loss (12,599) (8,023)
Treasury stock, at
cost (174,142) (155,265)
-------- --------
Total stockholders'
equity 1,357,142 1,449,149
Noncontrolling
interests in
subsidiaries 52,541 59,490
Total equity 1,409,683 1,508,639
--------- ---------
Total liabilities and
equity $4,834,855 $4,856,993
========== ==========
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
Revenue:
Residential $151,807 $172,428 $155,324
Commercial 52,241 80,113 49,063
Power Plant 180,827 121,823 236,484
------- ------- -------
Total revenue 384,875 374,364 440,871
Cost of revenue:
Residential 118,160 142,287 122,772
Commercial 45,226 81,541 46,880
Power Plant 169,952 130,233 180,401
------- ------- -------
Total cost of revenue 333,338 354,061 350,053
Gross margin 51,537 20,303 90,818
Operating expenses:
Research and development 32,706 32,362 21,168
Selling, general and administrative 97,791 105,643 77,214
Restructuring charges 96 335 3,581
--- --- -----
Total operating expenses 130,593 138,340 101,963
------- ------- -------
Operating loss (79,056) (118,037) (11,145)
Other expense, net (18,416) (13,282) (17,745)
------- ------- -------
Loss before income taxes and equity
in earnings (loss) of
unconsolidated investees (97,472) (131,319) (28,890)
Provision for income taxes (3,181) (28,778) (2,351)
Equity in earnings (loss) of
unconsolidated investees (764) 462 2,191
---- --- -----
Net loss (101,417) (159,635) (29,050)
Net loss attributable to
noncontrolling interests and
redeemable noncontrolling
interests 16,008 32,014 19,469
------
Net loss attributable to
stockholders $(85,409) $(127,621) $(9,581)
======== ========= =======
Net loss per share attributable to
stockholders:
- Basic $(0.62) $(0.93) $(0.07)
- Diluted $(0.62) $(0.93) $(0.07)
Weighted-average shares:
- Basic 137,203 136,653 132,033
- Diluted 137,203 136,653 132,033
SUNPOWER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
Cash flows from operating activities:
Net loss $(101,417) $(159,635) $(29,050)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and
amortization expense 42,117 40,638 28,563
Stock-based compensation 16,520 16,476 13,546
Non-cash interest expense 346 416 4,680
Equity in loss (earnings)
of unconsolidated
investees 764 (462) (2,191)
Excess tax benefit from
stock-based compensation - (14,285) (572)
Deferred income taxes (1,169) 41,004 (5,078)
Other, net 890 649 855
Changes in operating assets and liabilities, net of effect of
acquisitions:
Accounts receivable 12,561 19,641 32,735
Costs and estimated
earnings in excess of
billings (17,525) 408 140,970
Inventories (18,248) (50,611) (108,072)
Project assets (179,376) (263,218) (93,150)
Prepaid expenses and other
assets (45,034) (99,650) (25,090)
Long-term financing
receivables, net (44,011) (34,555) (29,198)
Advances to suppliers 11,913 20,760 13,903
Accounts payable and other
accrued liabilities (69,974) 150,745 (51,781)
Billings in excess of costs
and estimated earnings 26,866 34,629 5,621
Customer advances (5,124) 179 (10,099)
Net cash used in operating
activities (369,901) (296,871) (113,408)
-------- -------- --------
Cash flows from investing activities:
Decrease (increase) in
restricted cash and cash
equivalents (1,806) 4,485 (18,828)
Purchases of property,
plant and equipment (47,044) (97,699) (24,564)
Cash paid for solar power
systems, leased and to be
leased (23,238) (23,957) (19,403)
Proceeds from (payments to)
8point3 Energy Partners LP
attributable to real
estate projects and
residential lease
portfolio (9,968) 175,863 -
Cash paid for acquisitions,
net of cash acquired - (5,735) -
Cash paid for investments
in unconsolidated
investees (9,752) - -
Cash paid for intangibles - (6,535) (526)
Net cash provided by (used
in) investing activities (91,808) 46,422 (63,321)
------- ------ -------
Cash flows from financing activities:
Proceeds from issuance of
convertible debt, net of
issuance costs - 416,305 -
Cash paid for repurchase of
convertible debt - - (324,273)
Proceeds from settlement of
4.50% Bond Hedge - - 74,628
Repayment of bank loans and
other debt (7,725) (231) (7,946)
Proceeds from issuance of
non-recourse residential
financing, net of issuance
costs 28,339 17,444 -
Repayment of non-recourse
residential financing (1,065) (445) (10,944)
Contributions from
noncontrolling interests
and redeemable
noncontrolling interests
attributable to
residential projects 24,082 47,149 45,890
Distributions to
noncontrolling interests
and redeemable
noncontrolling interests
attributable to
residential projects (5,309) (3,501) (2,260)
Proceeds from issuance of
non-recourse power plant
and commercial financing,
net of issuance costs 79,440 212,709 90,718
Repayment of non-recourse
power plant and commercial
financing (37,301) (12,166) (90)
Contributions from
noncontrolling interests
attributable to power
plant and commercial
projects - 12,410 -
Proceeds from exercise of
stock options - 50 3
Excess tax benefit from
stock-based compensation - 14,285 572
Purchases of stock for tax
withholding obligations on
vested restricted stock (18,876) (1,373) (38,704)
Net cash provided by (used
in) financing activities 61,585 702,636 (172,406)
------ ------- --------
Effect of exchange rate
changes on cash and cash
equivalents 774 (540) (5,467)
--- ---- ------
Net increase (decrease) in
cash and cash equivalents (399,350) 451,647 (354,602)
Cash and cash equivalents,
beginning of period 954,528 502,881 956,175
------- ------- -------
Cash and cash equivalents,
end of period $555,178 $954,528 $601,573
======== ======== ========
Non-cash transactions:
Assignment of financing
receivables to third
parties $1,097 $573 $1,307
Costs of solar power
systems, leased and to be
leased, sourced from
existing inventory 15,085 19,309 14,664
Costs of solar power
systems, leased and to be
leased, funded by
liabilities 9,050 10,972 6,388
Costs of solar power
systems under sale-
leaseback financing
arrangements sourced from
project assets - - 1,050
Property, plant and
equipment acquisitions
funded by liabilities 81,369 28,950 20,185
Net reclassification of
cash proceeds offset by
project assets in
connection with the
deconsolidation of assets
sold to the 8point3 Group 8,726 97,272 -
Use of Non-GAAP Financial Measures
To supplement its consolidated financial results presented in accordance with GAAP, the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures, as described below. The specific non-GAAP measures listed below are: revenue; gross margin; net income; net income per diluted share; and earnings before interest, taxes, depreciation and amortization ("EBITDA"). Management believes that each of these non-GAAP measures is useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provides investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analyses. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; the non-GAAP measures should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.
Non-GAAP revenue includes adjustments relating to 8point3, utility and power plant projects, and the sale of operating lease assets as described below. Non-GAAP gross margin includes adjustments relating to 8point3, utility and power plant projects, the sale of operating lease assets, stock-based compensation, and other items as described below. In addition to those same adjustments, non-GAAP net income and non-GAAP net income per diluted share are adjusted for the tax effect of these non-GAAP adjustments as described below. In addition to the same adjustments as non-GAAP net income, EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation.
Non-GAAP Adjustments
-- 8point3. In June 2015, 8point3 Energy Partners LP ("8point3 Energy
Partners"), a joint YieldCo vehicle formed by the company and First
Solar, Inc. ("First Solar" and, together with the company, the
"Sponsors") to own, operate and acquire solar energy generation assets,
completed an initial public offering ("IPO") of Class A shares
representing limited partner interests in 8point3 Energy Partners. The
IPO was consummated on June 24, 2015 whereupon the Class A shares are
now listed on the NASDAQ Global Select Market under the trading symbol
"CAFD." Immediately after the IPO, the company contributed a portfolio
of 170 MW of its solar generation assets (the "SPWR Projects") to
8point3 Operating Company, LLC ("OpCo"), 8point3 Energy Partners'
primary operating subsidiary. In exchange for the SPWR Projects, the
company received cash proceeds of $371 million as well as equity
interests in several 8point3 Energy Partners affiliated entities:
primarily common and subordinated units representing a 40.7% stake in
OpCo and a 50.0% economic and management stake in 8point3 Holding
Company, LLC ("Holdings"), the parent company of the general partner of
8point3 Energy Partners and the owner of incentive distribution rights
in OpCo. Holdings, OpCo, 8point3 Energy Partners and their respective
subsidiaries are referred to herein as the "8point3 Group" or "8point3."
The company includes adjustments related to the sales of projects contributed to 8point3 based on the difference between the fair market value of the consideration received and the net carrying value of the projects contributed, of which, a portion is deferred in proportion to the company's retained equity stake in 8point3. The deferred profit is subsequently recognized over time. This treatment is consistent with the accounting rules relating to the sale of such projects under International Financial Reporting Standards ("IFRS"). Under these rules, with certain exceptions such as for projects already in operation, the company's revenue is equal to the fair market value of the consideration received, and cost of goods sold is equal to the net carrying value plus a partial deferral of profit proportionate with the retained equity stake. Under GAAP, these sales are recognized under either real estate, lease, or consolidation accounting rules depending upon the nature of the individual asset contributed, with outcomes ranging from no profit recognition to full profit recognition. IFRS profit, less deferrals associated with retained equity, is recognized for sales related to the residential lease portfolio. Revenue recognition for other projects sold to 8point3 is deferred until these projects reach commercial operations consistent with IFRS rules. Equity in earnings of unconsolidated investees includes the impact of the company's share of 8point3's earnings related to sales of projects receiving sales recognition under IFRS but not GAAP. Management believes that these adjustments for the impact of 8point3 enable investors to better evaluate the company's revenue and profit generation performance.
-- Utility and power plant projects. The company includes adjustments
related to the revenue recognition of utility and power plant projects
based on the separately-identifiable components of transactions in order
to reflect the substance of the transactions. This treatment is
consistent with accounting rules relating to such projects under IFRS.
On a GAAP basis, such projects are accounted for under U.S. GAAP real
estate accounting guidance. Management calculates separate revenue and
cost of revenue amounts each fiscal period in accordance with the two
treatments above and the aggregate difference for the company's affected
projects is included in the relevant reconciliation tables below. Over
the life of each project, cumulative revenue and gross margin will be
equivalent under the two treatments; however, revenue and gross margin
will generally be recognized earlier under the company's non-GAAP
treatment than under the company's GAAP treatment. Among other factors,
this is due to the attribution of non-GAAP revenue and margin to the
company's project development efforts at the time of initial project
sale as required under IFRS accounting rules, whereas no separate
attribution to this element occurs under U.S. GAAP real estate
accounting guidance. Within each project, the relationship between the
adjustments to revenue and gross margins is generally consistent.
However, as the company may have multiple utility and power plant
projects in progress at any given time, the relationship in the
aggregate will occasionally appear otherwise. Management believes that
this adjustment for utility and power plant projects enables investors
to evaluate the company's revenue generation performance relative to the
direct costs of revenue of its core businesses.
-- Sale of operating lease assets. The company includes adjustments related
to the revenue recognition of the sale of certain property subject to an
operating lease (or of property that is leased by or intended to be
leased by the third-party purchaser to another party). This treatment is
consistent with accounting rules relating to the sale of such property
under IFRS. On a GAAP basis, these sales are accounted for as borrowing
transactions in accordance with lease accounting guidance. Management
believes that these adjustments for the sale of operating lease assets
enables investors to better evaluate the company's revenue and profit
generation performance.
-- Stock-based compensation. Stock-based compensation relates primarily to
the company's equity incentive awards. Stock-based compensation is a
non-cash expense that varies from period to period and is dependent on
market forces that are difficult to predict. Due to this
unpredictability, management excludes this item from its internal
operating forecasts and models. 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.
-- Other. The company combines amounts previously disclosed under separate
captions into "Other" when amounts do not have a significant impact on
the current fiscal period. Management believes that these adjustments
provide investors with a basis to evaluate the company's performance,
including compared with the performance of other companies, without
similar impacts. The amounts recorded in "Other" during the first
quarter of fiscal 2016 are driven by adjustments which would have
previously been disclosed under other non-GAAP adjustment captions,
including "IPO related costs," "Amortization of intangible assets,"
"Non-cash interest expense," and "Restructuring."
-- Tax effect. This amount is used to present each of the adjustments
described above on an after-tax basis in connection with the
presentation of non-GAAP net income and non-GAAP net income per diluted
share. The company's non-GAAP tax amount is based on estimated cash tax
expense and reserves. The company forecasts its annual cash tax
liability and allocates the tax to each quarter in a manner generally
consistent with its GAAP methodology. This approach is designed to
enhance investors' ability to understand the impact of the company's tax
expense on its current operations, provide improved modeling accuracy,
and substantially reduce fluctuations caused by GAAP to non-GAAP
adjustments, which may not reflect actual cash tax expense.
-- EBITDA adjustments. When calculating EBITDA, in addition to adjustments
described above, the company excludes the impact during the period of
the following items:
-- Cash interest expense, net of interest income
-- Provision for income taxes
-- Depreciation
Management presents this non-GAAP financial measure to enable investors to evaluate the company's performance, including compared with the performance of other companies.
For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.
SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)
Adjustments to Revenue:
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
GAAP revenue $384,875 $374,364 $440,871
8point3 (15,174) 952,115 -
Utility and power plant projects 53,538 31,012 (10,270)
Sale of operating lease assets 10,403 6,447 -
Non-GAAP revenue $433,642 $1,363,938 $430,601
======== ========== ========
Adjustments to Gross margin:
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
GAAP gross margin $51,537 $20,303 $90,818
8point3 (4,642) 351,661 -
Utility and power plant projects 3,557 13,079 (11,251)
Sale of operating lease assets 3,112 2,000 -
Stock-based compensation expense 4,125 3,308 2,566
Other 1,333 2,124 6,028
Non-GAAP gross margin $59,022 $392,475 $88,161
======= ======== =======
GAAP gross margin (%) 13.4% 5.4% 20.6%
Non-GAAP gross margin (%) 13.6% 28.8% 20.5%
Adjustments to Net income (loss):
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
GAAP net loss attributable to stockholders $(85,409) $(127,621) $(9,581)
8point3 10,719 394,097 -
Utility and power plant projects 3,557 13,079 (11,251)
Sale of operating lease assets 3,120 2,000 -
Stock-based compensation expense 16,520 16,476 13,546
Other 8,608 5,030 24,070
Tax effect 1,684 (32,663) 2,940
Non-GAAP net income (loss) attributable to stockholders $(41,201) $270,398 $19,724
======== ======== =======
Adjustments to Net income (loss) per diluted share:
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
Net income (loss) per diluted share
Numerator:
GAAP net loss available to common stockholders(1) $(85,409) $(127,621) $(9,581)
======== ========= =======
Non-GAAP net income (loss) available to common stockholders(1) $(41,201) $270,731 $20,275
======== ======== =======
Denominator:
GAAP weighted-average shares 137,203 136,653 132,033
Effect of dilutive securities:
Stock options - 2 41
Restricted stock units - 1,478 2,994
Upfront warrants (held by Total) - 6,564 6,908
Warrants (under the CSO2015) - - 1,781
0.75% debentures due 2018 - 12,026 12,026
Non-GAAP weighted-average shares(1) 137,203 156,723 155,783
======= ======= =======
GAAP net loss per diluted share $(0.62) $(0.93) $(0.07)
====== ====== ======
Non-GAAP net income (loss) per diluted share $(0.30) $1.73 $0.13
====== ===== =====
(1)In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 0.75%, 0.875%, and 4.0% debentures if the debentures are
considered converted in the calculation of net income (loss) per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the
debenture under the if-converted method is excluded from the calculation of non-GAAP net income (loss) per diluted share.
EBITDA:
THREE MONTHS ENDED
------------------
Apr. 3, Jan. 3, Mar. 29,
2016 2016 2015
---- ---- ----
GAAP net loss attributable to stockholders $(85,409) $(127,621) $(9,581)
8point3 10,719 394,097 -
Utility and power plant projects 3,557 13,079 (11,251)
Sale of operating lease assets 3,120 2,000 -
Stock-based compensation expense 16,520 16,476 13,546
Cash interest expense, net of interest income 12,184 10,180 11,092
Provision for income taxes 3,181 28,778 2,351
Depreciation 33,826 37,890 28,604
Other 8,608 5,030 24,070
EBITDA $6,306 $379,909 $58,831
====== ======== =======
Q2 2016 and
FY 2016
GUIDANCE Q2 2016 FY 2016
(in
thousands
except
percentages)
Revenue
(GAAP) $290,000-$340,000 $2,800,000-$3,000,000
Revenue
(non-
GAAP) (1) $310,000-$360,000 $3,200,000-$3,400,000
Gross
margin
(GAAP) 10%-12% 13%-15%
Gross
margin
(non-
GAAP) (2) 12%-14% 14%-16%
Net income
(loss)
(GAAP) ($90,000)-($65,000) $0-$50,000
EBITDA (3) $0-$25,000 $450,000-$500,000
(1) Estimated non-GAAP amounts above
for Q2 2016 include net
adjustments that increase revenue
by approximately $20 million of
revenue related to 8point3.
Estimated non-GAAP amounts above
for fiscal 2016 include net
adjustments that increase revenue
by approximately $400 million of
revenue related to 8point3.
(2) Estimated non-GAAP amounts above
for Q2 2016 include net
adjustments that increase gross
margin by approximately $3
million related to 8point3, $5
million related to stock-based
compensation expense, and $1
million related to other items.
Estimated non-GAAP amounts above
for fiscal 2016 include net
adjustments that increase gross
margin by approximately $60
million related to 8point3, $15
million related to stock-based
compensation expense, and $10
million related to other items.
(3) Estimated EBITDA amounts above for
Q2 2016 include net adjustments
that decrease net loss by
approximately $16 million related
to 8point3, $18 million related
to stock-based compensation
expense, $5 million related to
other items, $15 million related
to interest expense, $1 million
related to income taxes and $35
million related to depreciation.
Estimated EBITDA amounts above
for fiscal 2016 include net
adjustments that increase net
income by approximately $100
million related to 8point3, $70
million related to stock-based
compensation expense, $10 million
related to other items, $60
million related to interest
expense, $40 million related to
income taxes and $170 million
related to depreciation.
The following supplemental data represent the adjustments, individual charges and credits that are included or excluded from SunPower's non-GAAP revenue, gross margin, net income and net income per diluted share measures for each period presented in the Consolidated Statements of Operations contained herein.
SUPPLEMENTAL DATA
(In thousands, except percentages)
THREE MONTHS ENDED
April 3, 2016
-------------
Revenue Gross margin Operating expenses Other income (expense), net Benefit from (provision Equity in earnings of unconsolidated
for) income taxes investees Net income (loss) attributable to stockholders
------- ------------ ------------------ --------------------------- ------------------------ ------------------------------------- ----------------------------------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $151,807 $52,241 $180,827 $33,647 22.2% $7,015 13.4% $10,875 6.0% $(85,409)
8point3 (1,312) - (13,862) (485) - (4,157) - - - 1,062 - 14,299 10,719
Utility and power
plant projects - - 53,538 - - 3,557 - - - - - - 3,557
Sale of operating
lease assets 10,403 - - 3,112 - - - - - 8 - - 3,120
Stock-based
compensation
expense - - - 827 652 2,646 3,032 9,363 - - - - 16,520
Other - - - 482 665 186 1,827 5,352 96 - - - 8,608
Tax effect - - - - - - - - - - 1,684 - 1,684
Non-GAAP $160,898 $52,241 $220,503 $37,583 23.4% $8,332 15.9% $13,107 5.9% $(41,201)
======== ======= ======== ======= ====== ======= ========
January 3, 2016
---------------
Revenue Gross margin Operating expenses Other income (expense), net Benefit from (provision Equity in earnings of unconsolidated
for) income taxes investees Net income (loss) attributable to stockholders
------- ------------ ------------------ --------------------------- ------------------------ ------------------------------------- ----------------------------------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $172,428 $80,113 $121,823 $30,141 17.5% $(1,428) -1.8% $(8,410) -6.9% $(127,621)
8point3 (1,443) 54,793 898,765 (640) 13,930 338,371 - - - 1,057 - 41,379 394,097
Utility and power
plant projects - - 31,012 - - 13,079 - - - - - - 13,079
Sale of operating
lease assets 6,447 - - 2,000 - - - - - - - - 2,000
Stock-based
compensation
expense - - - 1,089 840 1,379 3,113 10,055 - - - - 16,476
Other - - - 651 425 1,048 705 1,879 335 (13) - - 5,030
Tax effect - - - - - - - - - - (32,663) - (32,663)
Non-GAAP $177,432 $134,906 $1,051,600 $33,241 18.7% $13,767 10.2% $345,467 32.9% $270,398
======== ======== ========== ======= ======= ======== ========
March 29, 2015
--------------
Revenue Gross margin Operating expenses Other income (expense), net Benefit from (provision Equity in earnings of unconsolidated
for) income taxes investees Net income (loss) attributable to stockholders
------- ------------ ------------------ --------------------------- ------------------------ ------------------------------------- ----------------------------------------------
Residential Commercial Power Plant Residential Commercial Power Plant Research and Selling, general Restructuring charges
development and administrative
----------- ------------------
GAAP $155,324 $49,063 $236,484 $32,552 21.0% $2,183 4.4% $56,083 23.7% $(9,581)
Utility and power
plant projects - - (10,270) - - (11,251) - - - - - - (11,251)
Stock-based
compensation
expense - - - 922 388 1,256 2,273 8,707 - - - - 13,546
Other - - - 1,804 454 3,770 330 3,783 3,581 10,348 - - 24,070
Tax effect - - - - - - - - - - 2,940 - 2,940
Non-GAAP $155,324 $49,063 $226,214 $35,278 22.7% $3,025 6.2% $49,858 22.0% $19,724
======== ======= ======== ======= ====== ======= =======
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SOURCE SunPower Corp.
