SunPower Reports First-Quarter 2014 Results - Q1 2014 GAAP Revenue of $692 Million, Non-GAAP Revenue of $684 Million

- Q1 2014 GAAP Earnings Per Share of $0.42, Non-GAAP Earnings Per Share of $0.49

SAN JOSE, Calif., April 24, 2014 /PRNewswire/ -- SunPower Corp. (NASDAQ: SPWR) today announced financial results for its fiscal 2014 first quarter.    

($ Millions, except percentages and per-share data)

1st Quarter

2014

4th Quarter

2013

1st Quarter

2013

GAAP revenue

$692.4

$638.1

$635.4

GAAP gross margin

23.5%

20.5%

9.3%

GAAP net income (loss)

$65.0

$22.3

($54.7)

GAAP net income (loss) per diluted share

$0.42

$0.15

($0.46)

Non-GAAP revenue1

$683.7

$758.2

$574.6

Non-GAAP gross margin1

22.0%

20.4%

22.7%

Non-GAAP net income1

$75.3

$72.2

$27.2

Non-GAAP net income per diluted share1

$0.49

$0.47

$0.22


1Information about SunPower's use of non-GAAP financial information is provided under "Use of Non-GAAP Financial Measures" below.

"SunPower once again posted strong quarterly results, reflecting the power of our full value chain integration and diversified market footprint. We benefitted from strong demand in our distributed generation channels as well as solid execution in our global power plant business," said Tom Werner, SunPower president and CEO.  "Construction of our new 350-megawatt (MW) solar cell manufacturing facility (Fab 4) is on track with first silicon expected early next year.  This new capacity will allow us to address the growing demand for our high efficiency solar systems and will incorporate technology that further advances SunPower's performance advantage.  A pre-production solar cell incorporating Fab 4 technology was recently measured at more than 25 percent efficiency by the National Renewable Energy Laboratory.

"Regionally, our North America business continued to perform well.  The 579-MWac Solar Star projects for MidAmerican Solar remain on schedule with more than 170-MW grid connected.  We also started construction of a 20-MWac SunPower® C7 Tracker (C7) power plant, with project completion expected early next year.  We ended the quarter with very strong bookings in our commercial business as corporate and public sector customers continued to demonstrate their preference for SunPower's high efficiency solutions.  We also posted another solid quarter in our residential business, where we offer the industry's best technology at a competitive price along with a flexible array of financing options to meet the needs of all customers.  With the recent closing of innovative lease financing facilities with Google and Hannon Armstrong, we continue to grow our residential offerings while improving cash flow. 

"Our EMEA business also performed well as we exceeded our revenue and margin goals for the quarter.  In Europe, demand remained strong and we benefitted from an improving pricing environment.  We also expanded our footprint in France, where 44-MW of recently-awarded French tender projects specified SunPower's technology.  We continue to meet or exceed our power plant project commitments in EMEA, grid connecting the first phase of a 22-MW project in South Africa approximately five months ahead of schedule.  With a strong backlog and favorable pricing trends, we remain bullish on our opportunities in this region.

"We posted another solid quarter in Asia Pacific as pricing remained strong and demand for our distributed generation and power plant solutions in Japan significantly exceeded our supply.  In China, our C7 manufacturing joint venture achieved a number of key milestones during the quarter, including our first cell package order totaling more than 70-MW.  We will continue to scale-up production of this power plant technology for the China market and expect additional orders this year.

"Solar is now competitive with traditional generation in many markets.  We are well-positioned to lead future industry growth because of our unique strategy, differentiated products, 7.5 gigawatt (GW) global pipeline and a decade of experience in both distributed generation and power plant applications," concluded Werner. 

"We again exceeded our revenue and profit goals for the quarter as we benefitted from strong execution in all of our key markets," said Chuck Boynton, SunPower CFO.  "Additionally, we strengthened our balance sheet as we successfully managed our working capital and cash balances.  We were also pleased with our two new financings during the quarter.  Our $250 million Google tax equity partnership supports the profitable growth of our lease business over the long-term, while the Hannon Armstrong $42 million financing offers us a non-recourse debt structure that minimizes interest rate risk, maximizes the value of our existing lease assets and proves the high quality of our lease portfolio."   

First-quarter fiscal 2014 non-GAAP results include net adjustments that increase net income by $10.3 million, including a ($16.6) million gross margin adjustment related to the timing of revenue recognition from utility and power plant projects, $14.9 million in stock-based compensation expense, $5.2 million in non-cash interest expense, ($0.4) million of other adjustments and $7.3 million in tax effect. 

Second Quarter and Fiscal Year 2014 Financial Outlook

The company's second quarter 2014 consolidated non-GAAP guidance is as follows: revenue of $575 million to $625 million, gross margin of 18 percent to 20 percent, net income per diluted share of $0.15 to $0.35 and MW recognized in the range of 275-MW to 300-MW.  On a GAAP basis, the company expects revenue of $500 million to $550 million, gross margin of 18 percent to 20 percent and net income (loss) per diluted share of ($0.10) to $0.10.

For fiscal year 2014, the company's expectations are as follows:  non-GAAP revenue of $2.5 billion to $2.65 billion, gross margin of 19 percent to 21 percent, net income per diluted share of $1.10 to $1.40, capital expenditures of $150 million to $170 million and GW recognized in the range of 1.2-GW to 1.3-GW.  On a GAAP basis, the company expects revenue of $2.55 billion to $2.70 billion, gross margin of 20 percent to 22 percent and net income per diluted share of $0.75 to $1.05

The company will host a conference call for investors this afternoon to discuss its first quarter 2014 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 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 first quarter 2014 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

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.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) expanding our manufacturing capacity; (b) anticipated construction timelines and milestones for our major projects; (c) growing demand in residential leasing and financing arrangements relating to our residential lease program; (d) growing demand in EMEA and Asia; (e) our growing international project pipeline; (f) our efforts to reduce panel manufacturing costs; (g) our positioning for long-term profitability; (h) strategically managing cash; (i) guidance for the second fiscal quarter of 2014, including non-GAAP revenue, gross margin, net income per diluted share and MW recognized and GAAP revenue, gross margin and net income (loss) per diluted share; (j) guidance for fiscal year 2014, including non-GAAP revenue, gross margin, net income per diluted share and GW recognized and GAAP revenue, gross margin and net income per diluted share; (k) reducing operating expenses; (l) generating free cash flow; (m) additional leasing capacity; and (n) optimization of our cost and capital structure.  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 our ability to obtain additional financing for our projects and our customers; (3) risks relating to our residential lease business, including risks of customer default, challenges securing lease financing, and declining conventional electricity prices; (4) our ability to meet our cost reduction targets; (5) regulatory changes and the availability of economic incentives promoting use of solar energy; (6) challenges inherent in constructing and maintaining certain of our large projects, such as the Solar Star projects; (7) the success of our ongoing research and development efforts and commercialization of new products and services; (8) fluctuations in our operating results; (9) manufacturing difficulties that could arise; and (10) challenges managing our joint ventures. 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.

SunPower is a registered trademark of SunPower Corp. All other trademarks are the property of their respective owners.

 SUNPOWER CORPORATION 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 (Unaudited) 



Mar. 30,


Dec. 29,


2014


2013

Assets




Current assets:




Cash and cash equivalents

$     754,741


$     762,511

Restricted cash and cash equivalents, current portion

14,140


13,926

Accounts receivable, net

265,402


360,594

Costs and estimated earnings in excess of billings

17,778


31,787

Inventories

234,380


245,575

Advances to suppliers, current portion

69,103


58,619

Project assets - plants and land, current portion

30,304


69,196

Prepaid expenses and other current assets

648,979


646,270

Total current assets

2,034,827


2,188,478





Restricted cash and cash equivalents, net of current portion

19,652


17,573

Restricted long-term marketable securities

8,715


8,892

Property, plant and equipment, net

535,287


533,387

Solar power systems leased and to be leased, net

360,571


345,504

Project assets - plants and land, net of current portion

7,751


6,411

Advances to suppliers, net of current portion

321,474


324,695

Long-term financing receivables, net

207,606


175,273

Other long-term assets

330,458


298,477

Total assets

$  3,826,341


$  3,898,690





Liabilities and Equity




Current liabilities:




Accounts payable

$     418,566


$     443,969

Accrued liabilities

378,501


358,157

Billings in excess of costs and estimated earnings

191,641


308,650

Short-term debt

17,157


56,912

Convertible debt, current portion

460,501


455,889

Customer advances, current portion

38,752


36,883

Total current liabilities

1,505,118


1,660,460





Long-term debt

123,423


93,095

Convertible debt, net of current portion

300,079


300,079

Customer advances, net of current portion

162,686


167,282

Other long-term liabilities

544,646


523,991

Total liabilities

2,635,952


2,744,907





Equity:




Preferred stock

-


-

Common stock

124


122

Additional paid-in capital

1,987,870


1,980,778

Accumulated deficit

(741,448)


(806,492)

Accumulated other comprehensive loss

(3,769)


(4,318)

Treasury stock, at cost

(97,443)


(53,937)

Total stockholders' equity

1,145,334


1,116,153

Noncontrolling interests in subsidiaries

45,055


37,630

Total equity

1,190,389


1,153,783

Total liabilities and equity

$  3,826,341


$  3,898,690



SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)



THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013







Revenue:






AMERICAS

$ 471,023


$ 382,650


$ 484,122

EMEA

126,258


154,285


68,652

APAC

95,141


101,199


82,659

Total revenue

692,422


638,134


635,433







Cost of revenue:






AMERICAS

350,313


291,657


416,081

EMEA

99,441


129,921


91,494

APAC

79,679


85,888


68,545

Total cost of revenue

529,433


507,466


576,120







Gross margin

162,989


130,668


59,313







Operating expenses:






  Research and development

16,746


16,972


13,170

  Selling, general and administrative

73,928


76,125


70,092

  Restructuring charges

(461)


897


(337)







     Total operating expenses

90,213


93,994


82,925







Operating income (loss)

72,776


36,674


(23,612)







  Other expense, net

(17,905)


(25,428)


(35,035)







Income (loss) before income taxes and equity in earnings (loss) of unconsolidated investees

54,871


11,246


(58,647)







Provision for income taxes

(13,620)


(8,985)


(2,989)

Equity in earnings (loss) of unconsolidated investees

1,783


1,611


(333)







Net income (loss)

43,034


3,872


(61,969)







  Net loss attributable to noncontrolling interests

22,010


18,466


7,273







Net income (loss) attributable to stockholders

$   65,044


$   22,338


$ (54,696)







Net income (loss) per share attributable to stockholders:






  - Basic

$       0.53


$       0.18


$     (0.46)

  - Diluted

$       0.42


$       0.15


$     (0.46)







Weighted-average shares:






  - Basic

122,196


121,464


119,553

  - Diluted

160,434


151,337


119,553



SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013







Cash flows from operating activities:






Net income (loss)

$   43,034


$     3,872


$ (61,969)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:






Depreciation and amortization expense

25,371


25,067


23,767

Stock-based compensation

14,867


14,575


8,516

Non-cash interest expense

5,170


12,634


11,890

Equity in (earnings) loss of unconsolidated investees

(1,783)


(1,611)


333

Deferred income taxes and other tax liabilities

17,985


(1,179)


4,724

Other, net

9


1,184


1,094

Changes in operating assets and liabilities:






Accounts receivable

93,574


(7,365)


60,340

Costs and estimated earnings in excess of billings

14,009


10,776


(849)

Inventories

4,043


32,300


(5,606)

Project assets

22,491


20,019


(35,250)

Long-term financing receivables, net

(32,333)


(36,096)


(25,798)

Prepaid expenses and other assets

(11,994)


(80,667)


223,287

Advances to suppliers

(7,263)


(18,174)


(4,319)

Accounts payable and other accrued liabilities

(16,972)


13,830


(28,825)

Billings in excess of costs and estimated earnings

(117,009)


55,321


(2,697)

Customer advances

(2,727)


(11,610)


(1,775)

Net cash provided by operating activities

50,472


32,876


166,863







Cash flows from investing activities:






(Increase) decrease in restricted cash and cash equivalents

(2,293)


521


17,797

Purchases of property, plant and equipment

(8,800)


(8,594)


(12,042)

Cash paid for solar power systems, leased and to be leased

(14,989)


(13,616)


(41,688)

Cash paid for solar power systems

-


(21,257)


-

Proceeds from sale of equipment to third-party

-


-


11

Cash paid for investments in unconsolidated investees

(5,013)


(16,350)


-

Net cash used in investing activities

(31,095)


(59,296)


(35,922)







Cash flows from financing activities:






Proceeds from issuance of project loans

-


14,169


24,061

Proceeds from residential lease financing

-


13,027


39,090

Proceeds from issuance of non-recourse debt financing

39,108


-


-

Proceeds from sale-leaseback financing

16,685


32,382


33,850

Contributions from noncontrolling interests

30,552


26,607


12,315

Proceeds from exercise of stock options

68


58


25

Proceeds from settlement of 4.75% Bond Hedge

68,842


-


-

Payments to settle 4.75% Warrants

(81,077)


-


-

Repayment of bank loans, project loans and other debt

(7,850)


(388)


(180,501)

Assumption of project loan by customer

(40,672)


(34,850)


-

Repayment of residential lease financing

(7,213)


-


-

Repayment of sale-leaseback financing

(779)


(3,680)


-

Distributions to noncontrolling interests

(1,117)


(335)


-

Purchases of stock for tax withholding obligations on vested restricted stock

(43,506)


(2,245)


(10,739)

Cash paid for repurchase of convertible debt

(1)


-


-

Net cash provided by (used in) financing activities

(26,960)


44,745


(81,899)







Effect of exchange rate changes on cash and cash equivalents

(187)


611


(942)

Net increase (decrease) in cash and cash equivalents

(7,770)


18,936


48,100

Cash and cash equivalents, beginning of period

762,511


743,575


457,487

Cash and cash equivalents, end of period

$ 754,741


$ 762,511


$ 505,587







Non-cash transactions:






Assignment of financing receivables to a third party financial institution

$     1,496


$   25,613


$   33,969

Property, plant and equipment acquisitions funded by liabilities

5,544


5,288


5,042

Costs of solar power systems, leased and to be leased, sourced from existing inventory

7,120


10,380


15,536

Costs of solar power systems, leased and to be leased, funded by liabilities

1,634


4,392


4,070

Costs of solar power systems under sale-leaseback financing arrangements sourced from project assets

15,269


6,043


20,066



SUNPOWER CORPORATION

REVENUE BY SIGNIFICANT CATEGORY

(In thousands)

(Unaudited)



THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013







Revenue:






Solar power products1

$ 238,578


$ 269,725


$ 185,880

Solar power systems2

403,755


316,970


404,915

Residential leases3

38,732


41,556


35,250

Other revenue4

11,357


9,883


9,388


$ 692,422


$ 638,134


$ 635,433


1 Solar power products represents direct sales of panels, balance of system components, and inverters to dealers, systems integrators, and residential, commercial, and utility customers in all regions.


2 Solar power systems represents revenue recognized in connection with our construction and development contracts.


3 Residential leases represents revenue recognized on solar power systems leased to customers under our solar lease program.


4 Other revenue includes revenue related to our solar power services and solutions, such as post-installation systems monitoring and maintenance and commercial power purchase agreements.

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. Management adjusts for these items because it does not consider such items when evaluating the core operational activities of the company. The specific non-GAAP measures listed below are revenue, gross margin, net income, net income per diluted share, earnings before interest, taxes, depreciation and amortization (EBITDA), and free cash flow. 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 utility and power plant projects as described below. Non-GAAP gross margin includes adjustments relating to utility and power plan projects, stock-based compensation, non-cash interest expense, 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 gross margin, EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation. Free cash flow includes adjustments relating to investing cash flows and lease financings as described below.

Non-GAAP Adjustments

  • 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 International Financial Reporting Standards (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.
  • Gain on contract termination. During the third quarter of fiscal 2013, the company agreed to terminate a contract with one of its suppliers. As a result, the company recorded a gain associated with the non-cash forfeiture of a previously recorded advance from the supplier. As this gain is nonrecurring in nature, excluding this data provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without similar impacts.
  • 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.
  • Non-cash interest expense. The company separately accounted for the fair value liabilities of the embedded cash conversion option and the over-allotment option on its 4.5% senior cash convertible debentures issued in 2010 as an original issue discount and a corresponding derivative conversion liability. As a result, the company incurs interest expense that is substantially higher than interest payable on its 4.5% senior cash convertible debentures. The company excludes non-cash interest expense because the expense does not reflect its financial results in the period incurred. In addition, in connection with the Liquidity Support Agreement with Total executed on February 28, 2012, the company issued warrants to Total to acquire 9,531,677 shares of its common stock. The fair value of the warrants was recorded as debt issuance costs and amortized over the expected life of the agreement. As a result, the Company incurred non-cash interest expense associated with the amortization of the warrants. Management believes that this adjustment for non-cash interest expense provides investors with a basis to evaluate the company's performance, including compared with the performance of other companies, without non-cash interest expense.
  • Other. Beginning in the first quarter of fiscal 2013, the company combined amounts previously disclosed under separate captions into "Other" when such amounts no longer 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 adjustments recorded in "Other" for the first quarter of fiscal 2014 are primarily driven by adjustments which would have previously been disclosed under "Restructuring charges."

  • 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 proportion to earnings for that period. 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 with a basis to evaluate the company's performance, including compared with the performance of other companies.

  • Free cash flow adjustments. When calculating free cash flow, the company includes the impact during the period of the following items:
    • Net cash used in investing activities
    • Proceeds from residential lease financing
    • Proceeds from issuance of non-recourse debt financing
    • Proceeds from sale-leaseback financing
    • Contributions from noncontrolling interests
    • Distributions to noncontrolling interests
    • Repayment of sale-leaseback financing
    • Repayment of residential lease financing

Management presents this non-GAAP financial measure to enable investors with a basis 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



Mar. 30,


Dec. 29,


Mar. 31,



2014


2013


2013









GAAP revenue

$ 692,422


$ 638,134


$ 635,433


Utility and power plant projects

(8,709)


120,058


(60,801)


Non-GAAP revenue

$ 683,713


$ 758,192


$ 574,632









Adjustments to Gross margin:








THREE MONTHS ENDED



Mar. 30,


Dec. 29,


Mar. 31,



2014


2013


2013


GAAP gross margin

$ 162,989


$ 130,668


$   59,313


Utility and power plant projects

(16,608)


19,381


68,138


Stock-based compensation expense

3,556


3,664


1,710


Non-cash interest expense

700


699


528


Other

-


514


803


Non-GAAP gross margin

$ 150,637


$ 154,926


$ 130,492









GAAP gross margin (%)

23.5%


20.5%


9.3%


Non-GAAP gross margin (%)

22.0%


20.4%


22.7%




Adjustments to Net income (loss):


THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Sep. 29,


Jun. 30,


Mar. 31,


2014


2013


20131


20131


2013

GAAP net income (loss) attributable to stockholders

$ 65,044


$ 22,338


$ 108,386


$ 19,565


$(54,696)

Utility and power plant projects

(16,608)


19,381


(26,323)


16,142


68,138

Gain on contract termination

-


-


(51,987)


-


-

Stock-based compensation expense

14,867


14,575


12,082


10,505


8,516

Non-cash interest expense

5,170


12,634


12,311


12,181


11,890

Other

(445)


1,370


835


825


1,820

Tax effect

7,317


1,900


3,477


3,594


(8,448)

Non-GAAP net income attributable to stockholders

$ 75,345


$ 72,198


$   58,781


$ 62,812


$  27,220











1 Additional information included for comparative period purposes as metrics were not previously disclosed in connection with the respective quarters.



Adjustments to Net income (loss) per diluted share:


THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013

Net income (loss) per diluted share






Numerator:






GAAP net income (loss) available to common stockholders1

$   67,679


$   22,889


$ (54,696)

Non-GAAP net income available to common stockholders1

$   77,980


$   75,426


$   27,220







Denominator:






GAAP weighted-average shares

160,434


151,337


119,553

Effect of dilutive securities:






Stock options

-


-


88

Restricted stock units

-


-


3,821

Upfront Warrants (held by Total)

-


-


2,025

4.75% debentures due 2014

-


8,712


-

Non-GAAP weighted-average shares1

160,434


160,049


125,487







GAAP net income (loss) per diluted share

$       0.42


$       0.15


$     (0.46)

Non-GAAP net income per diluted share

$       0.49


$       0.47


$       0.22







1 In accordance with the if-converted method, net income (loss) available to common stockholders excludes interest expense related to the 4.50% and 4.75% 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.



Revenue by Significant Category:


THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013

GAAP Solar power systems

$ 403,755


$ 316,970


$ 404,915

Utility and power plant projects

(8,709)


120,058


(60,801)

Non-GAAP Solar power systems

$ 395,046


$ 437,028


$ 344,114







EBITDA:







THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013

GAAP net income (loss) attributable to stockholders

$   65,044


$   22,338


$ (54,696)

Utility and power plant projects

(16,608)


19,381


68,138

Stock-based compensation expense

14,867


14,575


8,516

Non-cash interest expense

5,170


12,634


11,890

Other

(445)


1,370


1,820

Cash interest expense, net of interest income

14,834


11,536


15,457

Provision for income taxes

13,620


8,985


2,989

Depreciation

25,371


24,553


23,620

EBITDA

$ 121,853


$ 115,372


$   77,734







Free Cash Flow:







THREE MONTHS ENDED


Mar. 30,


Dec. 29,


Mar. 31,


2014


2013


2013

Net cash provided by operating activities

$   50,472


$   32,876


$ 166,863

Net cash used in investing activities

(31,095)


(59,296)


(35,922)

Proceeds from residential lease financing

-


13,027


39,090

Proceeds from issuance of non-recourse debt financing

39,108


-


-

Proceeds from sale-leaseback financing

16,685


32,382


33,850

Contributions from noncontrolling interests

30,552


26,607


12,315

Distributions to noncontrolling interests

(1,117)


(335)


-

Repayment of sale-leaseback financing

(779)


(3,680)


-

Repayment of residential lease financing

(7,213)


-


-

Free cash flow

$   96,613


$   41,581


$ 216,196










Q2 2014 GUIDANCE (in thousands except percentages and per share data)

Q2 2014

FY 2014

Revenue (GAAP)

$500,000-$550,000

$2,550,000-$2,700,000

Revenue (non-GAAP) (1)

$575,000-$625,000

$2,500,000-$2,650,000

Gross margin (GAAP)

18%-20%

20%-22%

Gross margin (non-GAAP) (2)

18%-20%

19%-21%

Net income (loss) per diluted share (GAAP)

$(0.10)-$0.10

$0.75-$1.05

Net income per diluted share (non-GAAP) (3)

$0.15-$0.35

$1.10-$1.40

(1)

Estimated non-GAAP amounts above include a net increase (decrease) of $75 million for Q2 2014 and $(50) million for fiscal 2014 of revenue primarily related to utility and power plant projects


(2)

Estimated non-GAAP amounts above for Q2 2014 include net adjustments that increase gross margin by approximately $15 million related to the non-GAAP revenue adjustments that are discussed above, $3 million related to stock-based compensation expense, and $1 million related to non-cash interest expense. Estimated non-GAAP amounts above for fiscal 2014 include net adjustments that increase (decrease) gross margin by approximately $(50) million related to the non-GAAP revenue adjustments that are discussed above, $15 million related to stock-based compensation expense, and $3 million related to non-cash interest expense.


(3)

Estimated non-GAAP amounts above for Q2 2014 include net adjustments that increase (decrease) net income by approximately $15 million related to the non-GAAP revenue adjustments that are discussed above, $14 million related to stock-based compensation expense, $5 million related to non-cash interest expense, $4 million related to other items, and $(5) million in tax effect. Estimated non-GAAP amounts above for fiscal 2014 include net adjustments that increase (decrease) net income by approximately $(50) million related to the non-GAAP revenue adjustments that are discussed above, $60 million related to stock-based compensation expense, $25 million related to non-cash interest expense, $15 million related to other items, and $5 million in tax effect.


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 (loss) and net income (loss) 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



March 30, 2014


 Revenue 

 Gross margin 

 Operating expenses 

 Other income (expense), net 

 Benefit from (provision for) income taxes 

 Net income (loss) attributable to stockholders 


AMERICAS

EMEA

APAC

AMERICAS

EMEA

APAC

 Research and

development 

 Selling, general

and administrative 

 Restructuring charges 

GAAP

$      471,023

$     126,258

$       95,141

$     120,710

25.6%

$       26,817

21.2%

$       15,462

16.3%






$             65,044

  Utility and power plant projects

(8,709)

-

-

(16,608)


-


-


-

-

-

-

-

(16,608)

  Stock-based compensation expense

-

-

-

2,071


655


830


1,797

9,514

-

-

-

14,867

  Non-cash interest expense

-

-

-

421


124


155


7

23

-

4,440

-

5,170

  Other

-

-

-

-


-


-


-

7

(461)

9

-

(445)

  Tax effect

-

-

-

-


-


-


-

-

-

-

7,317

7,317

Non-GAAP

$      462,314

$     126,258

$       95,141

$     106,594

23.1%

$       27,596

21.9%

$       16,447

17.3%






$             75,345


































December 29, 2013


 Revenue 

 Gross margin 

 Operating expenses 

 Other income (expense), net 

 Benefit from (provision for) income taxes 

 Net income (loss) attributable to stockholders 


AMERICAS

EMEA

APAC

AMERICAS

EMEA

APAC

 Research and

development 

 Selling, general

and administrative 

 Restructuring charges 

GAAP

$      382,650

$     154,285

$     101,199

$       90,993

23.8%

$       24,364

15.8%

$       15,311

15.1%






$             22,338

  Utility and power plant projects

120,058

-

-

19,381


-


-


-

-

-

-

-

19,381

  Stock-based compensation expense

-

-

-

1,941


798


925


1,677

9,234

-

-

-

14,575

  Non-cash interest expense

-

-

-

401


127


171


19

23

-

11,893

-

12,634

  Other

-

-

-

514


-


-


-

(48)

897

7

-

1,370

  Tax effect

-

-

-

-


-


-


-

-

-

-

1,900

1,900

Non-GAAP

$      502,708

$     154,285

$     101,199

$     113,230

22.5%

$       25,289

16.4%

$       16,407

16.2%






$             72,198


































March 31, 2013


 Revenue 

 Gross margin 

 Operating expenses 

 Other income (expense), net 

 Benefit from (provision for) income taxes 

 Net income (loss) attributable to stockholders 


AMERICAS

EMEA

APAC

AMERICAS

EMEA

APAC

 Research and

development 

 Selling, general

and administrative 

 Restructuring charges 

GAAP

$      484,122

$       68,652

$       82,659

$       68,041

14.1%

$      (22,842)

-33.3%

$       14,114

17.1%






$           (54,696)

  Utility and power plant projects

(60,801)

-

-

68,138


-


-


-

-

-

-

-

68,138

  Stock-based compensation expense

-

-

-

778


441


491


1,122

5,684

-

-

-

8,516

  Non-cash interest expense

-

-

-

220


129


179


17

23

-

11,322

-

11,890

  Other

-

-

-

359


186


258


-

1,354

(337)

-

-

1,820

  Tax effect

-

-

-

-


-


-


-

-

-

-

(8,448)

(8,448)

Non-GAAP

$      423,321

$       68,652

$       82,659

$     137,536

32.5%

$      (22,086)

-32.2%

$       15,042

18.2%






$             27,220

 

SOURCE SunPower Corp.



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