SunPower Reports Fourth-Quarter and Fiscal Year 2011 Results

SunPower Corp. (NASDAQ: SPWR) today announced financial results for its 2011 fourth quarter and fiscal year ended January 1, 2012.  

“We finished the year with a better than expected fourth quarter, as demand for SunPower’s differentiated technology sold through our diversified downstream channels enabled us to reach annual records in both revenue and shipments,” said Tom Werner, SunPower president and CEO.  “Operationally, we achieved both our panel production cost target and accelerated manufacturing step reduction program milestones.  Research and development investment results included initial volume production of our Maxeon Gen 3 next generation cell technology with a maximum cell efficiency of 24 percent.  As the market transitions, the companies with the strongest balance sheets will gain share.  Our strategic partnership with Total SA solidifies SunPower as one of the leading companies in the industry today.  

“In the fourth quarter, we benefitted from solid execution as we exceeded our non-GAAP outlook for revenue, gross margin and earnings per share.  Our Utility and Power Plants (UPP) business continued to outperform as we met our project commitments and began major construction activities at the 250 megawatt (MW) California Valley Solar Ranch (CVSR) power plant project. Additionally, we completed the permitting process for our three contracts with Southern California Edison, totaling 711 MW.  The associated power purchase agreements (PPAs), with pricing below the 2009 California market price referent, received California Public Utilities Commission (CPUC) approval last month.  Our power plant construction and technology delivery schedules give us predictable cash flows and confidence in our multi-year financial plan.  In the Residential and Commercial segment, we successfully managed through challenging industry conditions during the quarter.  We maintained our leadership position in the U.S. market driven by strong demand for our recently introduced residential leasing product.  Customers continue to choose SunPower for their rooftop systems due to our industry leading technology, competitive levelized cost of energy and superior product quality.

“With the completion of our acquisition of Tenesol SA in January 2012, we will expand our global channel footprint across the 18 countries where they do business today. Tenesol has an attractive differentiated building-integrated and off-grid product portfolio and a bankable reputation built on more than 500 MW of deployed systems globally.  With Tenesol, SunPower is better positioned to drive market share growth and new market penetration,” concluded Werner.

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

• Began major construction activities at the 250 MW CVSR power plant and on track for phase 1 completion milestone
• Received CPUC approval and conditional use permits for 711 MW of power plants under PPAs with Southern California Edison
• Acquired Tenesol from Total, increasing Total ownership to 66 percent of SunPower
• Signed 54-MW DC supply agreement with NRG Solar for delivery in 2011 and 2012 including 30-MW Oasis power system
• Broke ground on 13.8-MW DC Naval Air Weapons Station China Lake – largest solar project in Navy history and first 20 year PPA with a Federal agency
• Announced the first commercial contract of SunPower® C7 Tracker technology at Arizona State University under a PPA with SRP, an Ariz. utility
• Launched the company’s first mass market residential lease program with our U.S. dealers – more than 2,500 leases signed by year-end 2011
• Added Nissan and Orchard Supply Hardware to the company’s residential Alliance program
• Finished 2011 with more than $658 million in available cash; retired $199 million of convertible debt in Q1 2012

“We exited 2011 with more than $683 million in available cash and liquidity, and continued to improve our working capital metrics in the fourth quarter,” said Dennis Arriola, SunPower CFO.  “In 2012, our new reporting format will reflect our restructuring into a regional organization which will help reduce our operating expenses year over year.  Looking forward, we have sufficient resources and liquidity to grow production, increase market share and implement our manufacturing step reduction roadmap, while meeting our 2012 financial plan.”

Fourth quarter GAAP results include pre-tax charges, expenses and adjustments totaling approximately $91.3 million, including a $39.4 million gross margin adjustment related to the timing of revenue recognition from UPP project and construction activities, a $21.6 million adjustment resulting from the sale of stock in the company’s Woongjin joint venture,  $15.9 million in stock based compensation, non-cash interest expense and amortization of intangible expenses, $7.5 million of previously announced restructuring expenses, and $7.3 million related to the write-down of third-party inventory.  These charges are excluded from the company’s non-GAAP results.  Additionally, fourth quarter GAAP results exclude approximately $186 million in revenue related to GAAP real estate accounting requirements.    

2012 Financial Outlook

The company provided its first quarter 2012 consolidated non-GAAP guidance as follows: revenue of $500 million to $575 million, gross margin of 9% to 11%, net loss per diluted share of ($0.20) to ($0.05), capital expenditures of $45 million to $55 million, and MW recognized in the range of 190 MW to 210 MW.  On a GAAP basis, the company expects revenue of $420 million to $495 million, gross margin of 7% to 10% and net loss per diluted share of ($0.60) to ($0.45).

For the fiscal year 2012, the company expects both GAAP and non-GAAP revenue of $2.6 billion to $3.0 billion and MW recognized to be in the range of 900 MW to 1,200 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 fourth quarter 2011 performance on the Events and Presentations section of the SunPower Investor Relations page at //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.