SunPower Reports Third Quarter 2012 Results

Q3 2012 GAAP Revenue of $649 Million, Non-GAAP Revenue of $607 Million

SunPower Corp.(NASDAQ: SPWR) has announced financial results for its 2012 third quarter ended September 30, 2012. 

($ Millions except per-share data)	3rd Quarter 2012	2nd Quarter 2012	3rd Quarter 2011
GAAP revenue	$649.0(1)	$595.9(1)	$705.4
GAAP gross margin	12.4%	12.3%	10.8%
GAAP net loss	($48.5)(2)	($84.2)(2)	($370.8)(2)
GAAP net loss per diluted share	($0.41)(2)	($0.71)(2)	($3.77)(2)
Non-GAAP gross margin(3)	14.1%	15.1%	11.4%
Non-GAAP net income (loss) per diluted share(3)	$0.03	$0.08	$0.16
Megawatts (MW) produced	227	257	272

 (1) GAAP revenue includes $42.3 million and excludes $54.8 million for the third quarter of fiscal 2012 and the second quarter of fiscal 2012, respectively, in revenue related to the construction of utility power plant projects and construction activities. See details in the non-GAAP measure disclosure included in this press release.

(2) GAAP results include approximately $47.5 million and $90.6 million for the third quarter of fiscal 2012 and the second quarter of fiscal 2012, respectively, in net, pre-tax charges and adjustments excluded from non-GAAP results.  Q3 2011 GAAP results include pre-tax charges and adjustments, net of approximately $380.1 million excluded from non-GAAP results.

(3) A reconciliation of GAAP to non-GAAP results is included at the end of this press release.

"The successful execution of our long-term business strategy and diversified end market approach enabled us to achieve profitability on a non-GAAP basis for the quarter despite difficult industry conditions," said Tom Werner, SunPower president and CEO.  "Regionally, our performance in North America remained strong as we continued to meet our project schedules on California Valley Solar Ranch (CVSR) and Antelope Valley Solar Project while further expanding our residential leasing footprint due to our high efficiency rooftop value proposition.  Europe remains a very challenging market and we are implementing a number of initiatives to prudently manage our expenses and improve our long-term profitability in that region.  In Asia, our focus remains on continuing to grow our market share in Japan through our successful partnership with Toshiba and we are exploring opportunities in a number of emerging markets.   

"We also executed well on our cost reduction roadmap during the quarter," continued Werner.  "Our goal of reducing our panel cost by at least 25 percent year over year is on plan and we are taking steps to accelerate our 2013 roadmap as well.  Combined with our success in reducing balance of systems costs through our SunPower® Oasis® Power Plant product, we are now offering customers total system costs that are competitive with traditional generation on levelized cost of energy basis in many markets.  Additionally, as we previously announced, we have made the strategic decision to further restructure our manufacturing operations in the Philippines to effectively compete in an industry with significant overcapacity.  This action will enable us to meaningfully reduce inventory, lower operational costs and improve efficiency.

"With our diversified go-to-market strategy, industry leading technology, accelerated cost reduction roadmap as well as a strong financial position and the continued support of Total, we remain confident that our long-term strategy positions us well for future success," Werner concluded. 

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

• Completed first project milestone for 25-MW CVSR project – 22-MW grid connected

• PPA executed with PG&E for 100-MW Henrietta Solar Project for 2016 delivery

• Awarded 12 projects totaling 33 MW in recent French tender process

• Extended current supplier agreement with Toshiba for the Japanese market

• Acquired 42 percent stake in Australian Gen-tailer Diamond Energy

• Closed agreement with Citi and Credit Suisse for $325 million in lease financing capacity

• Expanded residential lease program - ~ 13,000 customers in first year of lease offering

• Completed rollout of 15 percent cell manufacturing step reduction initiative in Fab 2

"The third quarter reflected strength in a number of key areas as we exceeded our margin targets, delivered positive earnings and increased our available cash while successfully reducing inventory by more than $40 million," said Chuck Boynton, SunPower CFO.  "Looking forward, our focus remains on managing our cash flow and balance sheet, reducing inventory and rationalizing our operating expenses.  We will continue to manage to today's demand driven environment and position the company for long-term profitable growth." 

Third quarter fiscal 2012 GAAP results include pre-tax charges, expenses and adjustments totaling approximately $47.5 million, including a $5.8 million gross margin adjustment related to the timing of revenue recognition from utility power plant projects and construction activities, $59.6 million of goodwill and other intangible asset impairment, $50.6 million gain on share lending arrangement, $8.2 million in restructuring charges related to the company's consolidation of its Philippines manufacturing operations, $25.9 million in stock-based compensation, non-cash interest expense and amortization of intangible expenses, $6.4 million related to charges on manufacturing step reduction program, $2.1 million of restructuring charges related to December 2011 Restructuring Plan and  $1.5 million related to acquisition and integration costs.  These adjustments and charges are excluded from the company's non-GAAP results.  Additionally, third-quarter GAAP results include an adjustment of approximately $42.3 million in revenue related to GAAP real estate accounting requirements.

Fourth Quarter 2012 Financial Outlook

The company's fourth quarter 2012 consolidated non-GAAP guidance is as follows: revenue of $700 million to $900 million, gross margin of 14 percent to 16 percent, earnings per diluted share of $0.00 to $0.25, capital expenditures of $30 million to $40 million and MW recognized in the range of 200 MW to 250 MW.  On a GAAP basis, the company expects revenue of $650 million to $850 million, gross margin of two percent to four percent and loss per diluted share of $0.75 to $1.00.