SunPower Reports Second-Quarter 2011 Results

SunPower Corp. (NASDAQ: SPWRA, SPWRB) announced financial results for its 2011 second quarter ended July 3, 2011.  

"In the 2011 second quarter, revenue grew by more than 30% sequentially as demand for our high efficiency systems remained strong," said Tom Werner, SunPower president and CEO.  "However, mix changes related to market conditions in Germany and Italy impacted our margins.  We expect improved results in the second half of the year due to strong visibility in our North American utility and power plants (UPP) and commercial businesses, both of which are fully allocated through the end of the year.  Also, as a result of reallocating 85 megawatts (MW) from our UPP international business to our residential and commercial business, we plan to increase both our dealer count and proportion of SunPower product sold by our dealers.  Our 2011 panel cost reduction roadmap remains on track and we are accelerating our cell manufacturing step reduction initiative which will further reduce our capital cost per watt.

"Since successfully closing our strategic investment by Total at the end of the second quarter, we have been working closely with them to improve our balance sheet," continued Werner.  "Today we signed a new $771 million letter of credit facility using Total's $1 billion credit support agreement, giving us access to approximately $200 million of previously restricted cash to support our growth.  In addition, we have identified synergies between the companies that will allow us to leverage our investments in project development and other areas."  

Key milestones achieved by the company since the first quarter of 2011 include:

• $771 Million Letter of Credit Facility signed using Total Credit Support Agreement
• Launched world-record efficiency SunPower® E 20 Series solar panel
• Successful production run of Gen 2 high efficiency solar cells using 15% step reduced process
• Completed construction of both Pofi (5 MW) and Galatina (9 MW) power plants in Italy
• Received final Federal Environmental Assessment with a finding of no significant impact for 250 MWac California Valley Solar Ranch power plant and completed comprehensive settlement agreement with national environmental groups
• Partnered with Citi to fund $105 million U.S. residential solar lease program

"During the second quarter, we continued to focus on effectively managing our working capital needs and improving liquidity," said Dennis Arriola, SunPower CFO.  "We significantly improved inventory turns and reduced inventory by 15% from the first quarter.  With strong demand, continued focus on working capital management through our demand driven supply chain and global expense control initiatives, we are on track to meet our second half profitability goals."

As previously announced on July 25, 2011, second quarter GAAP results include pre-tax charges totaling approximately $75 million, including $29.3 million related to the company's panel reallocation strategy, $13.1 million in expenses related to the Total tender offer, and $32.5 million related to the write-down of third-party inventory and costs associated with the termination of third-party cell supply contracts.  These charges are excluded from the company's non-GAAP results.

"As a result of the abrupt changes in the Italian market, we have restructured and realigned the company to address the preference for small scale solar systems in Europe," said Werner.  "Our industry-leading, high efficiency technology is ideally suited for roofs and parking structures and we are well positioned to profitably grow share in key markets this year."

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.