SunPower Reports Second Quarter 2012 Results

Q2 2012 GAAP Revenue of $596 Million, Non-GAAP Revenue of $651 Million

SAN JOSE, Calif., Aug. 8, 2012.

SunPower Corp. (NASDAQ: SPWR) today announced financial results for its 2012 second quarter ended July 1, 2012.

“Our second quarter 2012 results reflect the success of our diversified end market strategy and good execution on both our technology and cost roadmaps, all enabling us to exceed our margin and earnings targets for the quarter,” said Tom Werner, SunPower president and CEO.

In North America, our utility and power plants group again outperformed as we met our second-quarter project commitments and remain ahead of plan for our 250-megawatt (MW) California Valley Solar Ranch (CVSR) project for NRG Energy. In the North American residential segment, we increased our leading market share, doubling the number of signed leases in the second quarter compared to the first quarter. Europe remains a very challenging market and we are looking at a number of strategies to improve our long term performance in the region. In Asia, demand in Japan remains strong and we are well positioned for future growth through our partnership with Toshiba.

“Operationally, we had a very strong quarter related to cost reduction as our blended cost per watt declined more than 10 percent sequentially as we benefitted from higher yields, further execution on our manufacturing step reduction program and lower raw material costs. As a result, we are accelerating our fourth-quarter blended panel cost per watt goal by more than 10 percent and expect to achieve a cost per watt of less than $0.75 on an efficiency adjusted basis on our lowest cost solar panels as we exit 2012, a full year ahead of schedule. Additionally, the commercial production of our Maxeon® Gen 3 solar cell technology, with efficiencies of up to 24 percent, is on track and we are increasing shipments of our 21 percent efficiency panel to customers.

“We firmly believe that by effectively managing our assets, driving new market development, controlling operating expenses and investing in areas that offer us the greatest returns, we will be in a leading market position when the industry exits its current transition phase,” concluded Werner.

Key milestones achieved by the company since the first quarter of 2012 include:

• Beat cost per watt target for the quarter, lowering fourth quarter 2012 forecast by more than 10 percent
• Signed a 6-MW SunPower® C7 Tracker deployment agreement with a U.S. utility for first half of 2013 construction
• Finalized agreement with Citi and Credit Suisse for $325 million in lease financing capacity
• Expanded residential lease program to 225 dealers – more than 10,000 leases signed to date
• Installed more than 30 percent of 250-MW CVSR power plant for NRG Energy
• Sold 25-MW McHenry Solar Project to K Road Power, 25-year power purchase agreement with Modesto Irrigation District
• Extended current supplier agreement with Toshiba for the Japanese market

“We prudently managed our balance sheet and working capital during the quarter as we reduced inventory and lowered our expenses,” said Chuck Boynton, SunPower CFO. “Looking forward, we continue to drive cost reduction initiatives and invest in our industry leading technology while leveraging our partnership with Total for emerging market development.”

Second quarter fiscal 2012 GAAP results include pre-tax charges, expenses and adjustments totaling approximately $90.6 million, including a $14.9 million gross margin adjustment related to the timing of revenue recognition from utility power plant projects and construction activities, $44.5 million in restructuring charges related to the company’s consolidation of its Philippines manufacturing operations, $22.3 million in stock-based compensation, non-cash interest expense and amortization of intangible expenses, $4.6 million related to charges on manufacturing step reduction program, $3.0 million of restructuring charges related to December 2011 Restructuring Plan, and $1.3 million related to acquisition and integration costs. These charges are excluded from the company’s non-GAAP results. Additionally, second-quarter GAAP results exclude an adjustment of approximately $54.8 million in revenue related to GAAP real estate accounting requirements.

2012 Financial Outlook

The company’s third quarter 2012 consolidated non-GAAP guidance is as follows: revenue of $550 million to $625 million, gross margin of 10 percent to 12 percent, earnings per diluted share loss of ($0.20) to ($0.05), capital expenditures of $25 million to $30 million and MW recognized in the range of 250 MW to 275 MW. On a GAAP basis, the company expects revenue of $545 million to $620 million, gross margin of 8 percent to 10 percent and net loss per diluted share of ($0.25) to ($0.10).

For fiscal year 2012, the company expects non-GAAP revenue of $2.6 billion to $2.8 billion, GAAP revenue of $2.4 billion to $2.6 billion and MW recognized to be in the range of 900 MW to 1,050 MW. SunPower remains committed to achieving break even or better non-GAAP profitability and a year-end unrestricted cash balance of more than $300 million, while investing in cost reduction initiatives.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP historical figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its second quarter 2012 performance on the Events and Presentations section of the SunPower Investor Relations page at https://investors.sunpowercorp.com/events.cfm. The capacity of power plants in this release is described in approximate megawatts on an alternating current (ac) basis unless otherwise noted.

About SunPower

SunPower Corp. (NASDAQ: SPWR) designs, manufactures and delivers the highest efficiency, highest reliability solar panels and systems available today. Residential, business, government and utility customers rely on the company’s quarter century of experience and guaranteed performance to provide maximum return on investment throughout the life of the solar system. Headquartered in San Jose, Calif., SunPower has offices in North America, Europe, Australia, Africa and Asia. For more information, visit www.SunPowercorp.com.

Forward-Looking Statements –

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that do not represent historical facts and may be based on underlying assumptions. The company uses words and phrases such as “well positioned,” “goal,” “expect to,” “on track,” “continuing to,” “will,” “believe,” “forecast,” “agreement,” “looking forward,” “outlook,” “guidance,” “expects,” “committed to,” and similar expressions to identify forward-looking statements in this press release, including forward-looking statements regarding: (a) being well position for future growth in Japan; (b) reducing cost per watt goal to achieve $0.75 cost per watt target on an efficiency adjusted basis on SunPower’s lowest cost solar panels; (c) commercial production of the Maxeon Gen 3 solar cell technology on track and increasing shipment on 21 percent efficient panels; (d) exiting the current industry transition in a leading market position; (e) being able to deploy the 6-MW SunPower C7 Tracker project for first half of 2013 construction; (f) continuing to leverage Total for emerging market development; (g) forecasted GAAP and non-GAAP Q3 2012 revenues, GAAP and non-GAAP gross margins, GAAP and non-GAAP net income/loss per diluted share, capital expenditures and MW recognized, and forecasted GAAP and non-GAAP revenues and MW recognized for fiscal 2012; and (h) commitment to break even or better non-GAAP profitability in 2012 and year end unrestricted cash balance of $300 million. Such forward-looking statements are based on information available to the company as of the date of this release and involve a number of risks and uncertainties, some beyond the company’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including risks and uncertainties such as: (i) increasing supply and competition in the industry and lower average selling prices, impact on gross margins, and any revaluation of inventory as a result of decreasing ASP or reduced demand;(ii) the impact of regulatory changes and the continuation of governmental and related economic incentives promoting the use of solar power, and the impact of such changes on our revenues, financial results, and any potential impairments or write off to our intangible assets, project assets, long-lived assets and goodwill; (iii) the company’s ability to meet its cost reduction plans and reduce it operating expenses; (iv) the company’s ability to obtain and maintain an adequate supply of raw materials, components, and solar panels, as well as the price it pays for such items and third parties’ willingness to renegotiate or cancel above market contracts; (v) general business and economic conditions, including seasonality of the solar industry and growth trends in the solar industry; (vi) the company’s ability to revise its portfolio allocation geographically and across downstream channels to respond to regulatory changes; (vii) the company’s ability to increase or sustain its growth rate; (viii) construction difficulties or potential delays, including obtaining land use rights, permits, license, other governmental approvals, and transmission access and upgrades, and any litigation relating thereto; (ix) timeline for revenue recognition and impact on the company’s operating results; (x) the significant investment required to construct power plants and the company’s ability to sell or otherwise monetize power plants, including the company’s success in completing the design, construction and maintenance of CVSR and the 601 MW power plant project; (xi) fluctuations in the company’s operating results and its unpredictability; (xii) the availability of financing arrangements for the company’s projects and the company’s customers; (xiii) potential difficulties associated with operating the joint venture with AUO and the company’s ability to achieve the anticipated synergies from the Tenesol acquisition; (xiv) success in achieving cost reduction, and the company’s ability to remain competitive in its product offering, obtain premium pricing while continuing to reduce costs and achieve lower targeted cost per watt; (xv) the company’s liquidity, substantial indebtedness, and its ability to obtain additional financing; (xvi) manufacturing difficulties that could arise;(xvii) the company’s ability to achieve the expected benefits from its relationship with Total; (xviii) the success of the company’s ongoing research and development efforts and the acceptance of the company’s new products and services; (xix) the company’s ability to protect its intellectual property; (xx) the company’s exposure to foreign exchange, credit and interest rate risk; (xxi) possible impairment or write off of goodwill, intangible assets, long-lived assets and project assets; (xxii) the success of our residential lease program; (xxiii) the accuracy of assumptions and compliance with treasury grant guidance and timing and amount of cash grant; (xxiv) possible consolidation of the joint venture AUO SunPower; and (xxv) other risks described in the company’s Annual Report on Form 10-K for the year ended January 1, 2012, Quarterly Report on Form 10-Q for the quarter ended April 1, 2012 and other filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing the company’s views as of any subsequent date, and the company is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

SUNPOWER CORPORATION

Tags: nrg energy, pv projects, second quarter project

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