Maxeon Solar Technologies (MAXN) 21 May 212021 Q1 Earnings call transcript

Good day Ladies and Gentlemen Welcome to the Maxeon Solar Technologies' First Quarter 2021 Earnings Call Currently all participants are only listen-only mode. Later we will conduct the question-and-answer session and instructions will follow at that time.

As a reminder this conference call is being recorded. I would now like to turn the conference over to our host Mr. Gary Dvorchak of The Blueshirt Group. begin. may you Sir

Aschenbrenner Good Earnings and today Conference Jeff Officer Executive operator Strohbecke. Officer First are to quarter Officer Peter Strategy Chief XXXX Call. Waters; Chief day you, Financial welcome Kai everyone Maxeon's Chief and Thank With us

Jeff. a to me call cover I the housekeeping few Let before items turn over

As a on this investor page relations of the website. be will reminder call a of replay today available Maxeon's later

that those we call; enhance deck today's events various make forward-looking described and are documents may Harbor that safe to To this uncertainties that XK press call and presentation Investor factors will presentations statements page we risks on the of other posted regarding website. for Please subject slide slide additional Maxeon's and have SEC During are those the today's the in supplemental statements. affect filings. today's these of Relations forward-looking see also information release a

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will plus gigawatt for Shipments to of already the take We a of solar the scale Maxeon's believe progress. supply agreement market. have large S module project. located announced project our to gigawatt fraction early and close a be this product we a announced to confirms power the the Southern supplier one when Earlier today, primer we April definitive new know quarter to you in U S year been the in in-house We're our As one this expansion second we made meaningful This have XXXX. will Nevada. a of order place storage it performance in plan value capacity. largest expected output first line pleased in as offering systems of one starting Gemini four project, the opinion quarter chosen the over panels covers In in of period installed. Jeez of Gemini performance line the U solar

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cost last Maxeon's and our of out supply to increasing to performance we're into near-term but expectations the this and long-term term match our of the expect China. are in adjust industry action said second large-scale disruptive competence We prospects chain. unlikely in allocation releasing V It our year still of for realities our coming year line high shipments large-scale as near the most for business the of now for pressures large-scale half sale summer. to visibility we the move spin D we're our taking J HSP That remains

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As will roll shortly. separation our as operating we Marco's expenses, legacy program our believe sequentially later year. discuss will Asian supporting optimization rationalized. our the we details one Kai expenses repurposed we phase our out otherwise will Malaysia Maxeon or We we more once European ramped U.S. cell decline performance in the SunPower cost that efforts off to X expect be lingering and this improve line substantially technology loading and factory

pilot enthusiastic this a XX and driven As as we X. XXXX we'll Air, we AC beyond at modules that line months the Maxeon production from next expect growth year by very execute we're look and have percentage over of next X sales and time robust Maxeon increased Maxeon into we of and

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excited Thank by all forward driven change. you I be the Jeff part our passionate and am this you shareholders of in hello of to are of and ahead. meeting team powering also words. I of highly everyone. analysts I look the appreciate to who kind weeks people Maxeon's and talented positive mission

operational on to consistent to provide numbers. like are the into dive few and We presentation we we that Before to results the to changes more discuss investors. all a making picture of meaningful all of the a want I'd performance

re-measurement current loss performance. on the First operating value meaningful report and losses instruments a or our contribute of or operating adjusted of part not prepaid-forward This core activities of starting delivery-forward. Mark-to-market EBITA past to now gains physical will considered gain do because we nor we excluded our or excluding measure sale these it be is will those projected evaluation our

restructuring excluding Secondly, operating compensation and gross expenses charges. expenses non-GAAP also starting non-GAAP by now we stock-based profit report and will

from have We and based compensation stock adjusted always EBITA. restructuring charges excluded expenses

aid that EBITA So measures adjusted evaluate change consistently your we profit how believe operating non-GAAP and performance we practice of expense these this all operating understanding compliments gross will business. non-GAAP that internally presenting

non-GAAP all the to of Please performance will let's financial GAAP discuss XK financial today. of reconciliation reconciliation details section that, financial first results. and provide With a quarter guidance. turn including then refer filed measures, in non-GAAP of details, more the measures to our our Form and For I drivers to now

outlook As at million. of revenue sequential DG progress results the well, reflected in slightly pleased our X team large-scale. and above our seasonality $XXX about the the of and executed quarter. the $XXX first with cords and in ago. revenue and projection expected the XX% are accomplishments The was weeks we offered million expected we decline in QX Maxeon The QX track pause

addition the shift large was by scale from revenue sequentially the versus we The fourth of to cost. higher well possible. XX up factors week per DG, on exchange line last favorable year-over-year by overall both XX% of ASP a ASP ASP's share rate year us In higher result $X.XX. resided track as $X.XX increase cents we watt per Overall of the driven as and costs versus was to sequential that some price while XX and while dollar XX% Euro in quarter. sequentially where as decrease pass in regular of Watts of versus The was to revenue increases shipments, IBC IBC revenue is chain $X.XX sales a performance XXXX a XXXX from in fiscal line versus combination increased revenue mix a but and supply $X.XX QX The quarter quarter. prior declines quarter mostly QX regular note sequentially offset week by product QX higher the are increased

of performance due line was XX% since in a Similarly with previous shown Now going the the scale scale, large moment mix the remaining most Not quarterly IVC mostly large take to the the large DG. shipment in supplemental let cover down dominated slides it in down market quarter. XX% up into product substantially the and increased which breakouts, DG DG, are by scale revenue the mix. revenues revenue sells to end and pause pots from with sales me surprising by only made into

sales large-scale, decline or but geography, by by into in Europe market. very were sequential supported driven almost that was XX% flat in of underlining this strengths sales attractive a Finally, the DG decline by XX%

lower sequential cause the partially by supply that mix ASP's previous large-scale flow Thus gross XX sales higher plant in sale of low Japan million completion slightly DG decreased starting Pacific are offset to declined projects as Profit to and In margin was resurgence or versus focusing was better through of due X.X%. P&L. chain and X.X% was Asia the COVID-XX. sales. we than costs sequentially higher profit the decline demand of and due was to forecast. quarter, to gross. Non-GAAP power due by This large some $X.X product volumes better

function a poly million the first all contract, of materials is which $XX.X and First expressly about to estimate XXXX cost million, get than We the profit quarter increase $XX were Non-GAAP loss slightly million. XXXX of logistics quarter gross expenses expenses $XX.X raw quarter associated a million. from gross points impacted market of percentage lower separation the increases were five revenue. first that out $XX.X The expenses of X% of SunPower. operating guidance by includes compared margin from approximately lingering our was sequential operating with

support to still investing our are and exciting the sales We and OPEX in while controlling R&D initiatives, tightly marketing discussed. just

previous and non-GAAP we QX the Therefore we quarterly the lower while the $XX.X higher loss quarter, million the the $XX.X our mark a loss larger gross our stockholders to million. $X.X apparent. contract. the of charges, loss us, the OPEX measurement In of a attributable be profit was mainly compared year. become put the spin-off million for excludes from level cost QX. poly loss to OPEX Net Adjusted the of market includes $XX.X of behind was that forward recall attributable million. As at expect will restructuring was versus stock-based EBITA for EBITA remainder below Asia-based to of of expenses market, compensation, to predominantly with EBITA structure $XX out gain the prepaid loss Adjusted adjusted million and

with capital cash the net million working the partially in by loss. for capital in to liquidity million loss mainly seasonal some and items. the us adjustment activities $XXX quarter as and non-cash let by Now use on million was operating the spent quarter $XX investment. $XX.X We net Net ended included was cash. items two driven turn offset and CapEx

and to initiatives. now factory sale million million on will Maxeon Malaysia production XXXX. April, we Maxeon to of ordinary pilot and line second the X CapEx on the We for the $XXX.X R&D raised from and upgrade Mexico In that of growth X expect in equipment New First technology. shares primarily fund $XXX in to seven X

covered. planned In investments, addition to just all I

G market. markets. U.S. attractive on the growing anticipate return capacity purchase testaments. and performance USD footprint line our will They optimize line the to equipment for exposure serve intended the are performance existing We We and our and factory to and machinery increase and large-scale to profitable

supplemental discuss for is expectations the outlook me and in of let slides. earnings Now release the XXXX summarizing second quarter our table our a

XXX XX in We in to of range a million. of range a revenue XXX expect $XXX and shipments megawatts to hundred

large-scale to revenue dynamic EEG naturally As about begin is out we we the seasonality, mentioned lead pricing half longer pressure And This $XX lengthier expected is loss half the is this gradually total a be into XXXX, sales gross and our accept to to includes to a prices. first The business. XX% early in of our of expect in large-scale second our a the to profit year, bookings. enable of to to sequential income expected of last call for project because between customers costs attributable million million cost polysilicon out pipeline resumption This of X chain sustained million. timeframe to raw profitability in From that causing million. market in the to in cycle Fran higher due are of year costs. range through The and statement. quarters in plays supply represent lengthy higher freight over expected previous decrease converting $XX flowing the times. China materials should the is $XX This us to

X expenses at million and plus operating million expenses $XX non-GAAP We or million. or minus $XX $X plus minus million gap expect of operating

the $XX win quarter. value closing growth. in the into which of the the Maxeon expected per creating our We restructuring at to in are and million. and charges adjusted complete million for close of incur is of projection as profitable $XX to our GAAP module France EBITA The second range to is QX is the expect which to conclusion operating loss million million $X the focused about a financial vast team factory delivering process expected majority cash on to of In expenses; loose $X five by reduce quarter, guidance costs to fixed are of in for included

optimize of bottom we New we in simultaneously to to forward positively With our Jeff out-of-market working while of an cash as will the XXXX. These conclusion to than designed the costs capital. Furthermore we reduce top and to on are performance. contract fuel growth both affect go million market tune been line initiatives and well December summarize opportunities of flows. open turn initiatives to polysilicon has call look ongoing to to the to This per the as Jeff? profitability I'll back before more year Q&A $XX that drag

Thanks Kai.

predicated great tangible unique have this three a first as which for should few increasingly and growing has confidence Over our growth the and of company confidence We our profitable on is of pillars of execution to transform a each ability you're quarters confidence Maxeon each us. in that these pillars in seeing excitement provide potential.

with And market us attributes products for our Beyond once And large make key supply brand scale with you and world normal. the as inverters We're the focused the quality in market on we've selling X a outside disruptive world's brand see return with we the global us set business the you're like channels way that a because to with to to capability had integrated also by to decades For Maxeon solar market our seeing in potential the establish performance those and with you're to comes Maxeon a monetizing regions and the both now us that. and has solar. panel world's our leading the market of seeing come. begin us returns Panel scale strong technology traction that on efficiency well with highest successful panel to unique the channel company are seeing continue technology up the the employs Air that change also same the the lastly available U.S. DG our progress of more reliability and we strategy system who Europe. and large micro us as And quickly approach extend outgrow chain U.S.

we're progress bottom and way making very from different to along we'll us and the A the we'll look Maxeon on and year making our our top thank journey. us company are now coming line. execution. a its We by see you for execution of on with All at like focused energized are

proceed. Now to the Operator please let's go Q&A session.

question Lee Our your of Brian Goldman Sachs from you. comes Thank open. is [Operator Instructions] first line

the margin a the QX in you through at thinking you guys see the out group is of for I to bottom I and Hey a cost ticking about going the you're sort bottom get the just figure of levels depressed like out lot a think gross is negative you these scale to now follow-up. help margins recovery be your in trying to interim the then to guess are cadence rest facing or alongside seems down from questions. a to do lot get just trajectory what know I thanks of the it some had trying margin for but you we margins on first-off pressures of second mix you is balance everyone's is continue what modeling is stay think sense our the a of the half peer reasonable

question. This then would the on encouraging very Sure costs everybody And I’d is Brian. are I and and keeping that stabilize. say Jeff some close say supplies seeing add it's a supply I'll general Kai the can a and in little like the we Thanks for bit to watch chain. detail. maybe of we more. are add some start of recently

it's down right that. direction. we're in the peak see pre-COVID at a -- So it's heading example again that we’re coming good glass the and spike is we quite Where of not now but levels actually as

improvement logistics we're year-ago where seeing was exactly it So thing progress. not there but making with same again the a

we're watching really second back all to in how that quickly it's that see half. obviously given think I the comes

helpful that cautiously the we're that'll on doing. that other half improve are There think pieces we’ll in second and side. certainly the margin be we're I costs see optimistic

new products As have you coming we do in. mentioned

we on QX We're So get to help the margins. X reductions. into with start will and that'll working cost QX always as Maxeon ship

but would else So anything say chain we're to to perspective a you'd sitting back not like cautiously supply add just I we're from Kai optimistic. that?

Yes I think right. that's

go panels that also control. headwinds via those our things the Maxeon are X favor in in there not things our business internally favor. AC in DG that that general that really that doing we’re work under of with So other and are course and Jeff X described But the the are seasonality our

we little see sometimes of there I to the pronounced times that have that So poly think is out-of-market of be second but end possibility Jeff at a the factors can also that as half towards P&L. our course margin But we'll due contract bit again more half improvement lumpy the hits cautiously how in said. the probably optimistic back a internal it

recover pause about in Okay fair bit And normalcy you level talking the China you in XXXX second maybe of there question whether seeing expect getting gives on that out don't ease-up? some faster that to back business. seeing right Can a orders large guess confidence then really then what of that gives maybe and you you'll Thanks here scale visibility you in elaborate of sort enough. the sort you're I of the why XXXX just you're to what or you're see pause guys. what now on it's kind that

say hit starting chain are that to there start pricing costs we're so to an equilibrium. Sure the overseas to and the closer see supply

planet. line. direction. where And that why still in stay get deals into There even happens we're expect you and what would we say dynamic So I’d you to engaged would to situation we ago in things were right was chain are in And XXXX we're they’re. would as to mismatch seeing say confident but are overseas quarter if That's back trending overseas China most look we of maybe or costs supply with continue that But actively there definitely much fall now into attractive go of costs I come start the huge very with a we're it's we're where a that outside seeing closer. the market assess QX here pricing supplier the XXXX. as to that in a waiting costs if

would we opportunities large we more And get very we end is great our say get I into outside ’XX optimistic visibility do lot or say of of as China. I’d of ‘XX towards strong. so optimism pipeline a a have And the

a lot. Thanks

Thank you.

of from Partners. comes Roth Capital Shen question next Philip Our

line open. is Your

the everyone. U.S. [indiscernible] questions. on Hi deal Gigawatt Congrats my taking P-Series X for into Thanks the

challenges increased of if Just was a competitive your P-Series recently pricing as curious did kind P-Series more relative supply the market product pricing you your in makes on of sense. increases or products chain if guys the that a it result positioning put

easier P-Series buy And North for to here America. the customers and so it in Thanks. became answer a more natural

Yes thank you the that pricing product have we're demand I’d it side pipeline pricing Phil. announced the last we say the we strong strong the very line in from again our seeing. we just with month. is and customers And a of U.S. costs that for P-Series is in in very the that look at coming

the So we U.S. we plant seen that to the about P-Series had with would first consistent in XXXX our the a anything that ramp-up about in see been effort U.S. if but spoken gross we supply for we margins say be talked still has timeframe expect the There'll line target in think we've that with those we being pricing pretty gross the XX%. XXXX that when in We're price that. over margins of expect XX% this time And I’d the range. increases seeing whole chain.

quite So nicely. it's calibrated

So fair for in U.S. help P-Series price did value the proposition say the the to near-term? increases

U.S. publicly listed company know party reputation. a to that. don't plant what about we I brand suppose company the is right with and a bring as has company that that a I'll as in Mexicali But it strong I a think down think necessarily Yes about like that a we

space. fAirly really really coming makes much what's think a from that that some us us. not funnel the in maybe are really that's company in just difference It's Chinese so the for which we rising are the who It's our unique as I of driving competitors. think I costs

lines don't supply think I So would without those that have things we've I this think different that been about seen. more disruption that along chain

Okay thanks.

if to products Air on for other the value cents a can’t you your you talk think to relative relative how that structure proposition can seems wondering basis? if maybe that the up pricing you unique unique As you product interesting absolute cost about like was of share per could lines about perhaps kind what watt the perhaps talk very a Maxeon

very parts it costs. Yes really of really it that of many the is a is say it I’d installation does magic of product selling the exciting it one lower is

from pricing that the comes to a percentage get at will give ability the value the costs. so or value us the decent it capture lower installation on of be And to really able we'll least that

ASPs be we're than Maxeon markets on would Air for going the we seeing So what like product expect could with higher IBC. like products into

near-term I again And a we least projects great expect low think be in rooftops it's commercial and to going load that that at a given we're So after going product. also with product the will nobody else going ASPs can that grow allow a We the really compete with. margin of help at healthy product. us sell to in to way profitable but think deployment it's good with the

Maxeon Great where Air? manufacture do the expect to you

We’ll start in France.

be to the flexibly into our we current can factories. the of our have initial to it any significantly markets. any put our the is we beauties for that Maxeon transported product but Air ability market we’re producing assembly in that of one that of module go is quickly It the One it borrows to from Europe is of France see

encapsulant product you a you ‘XX EVA can traditional talk standpoint from are or see as and is Great how standpoint we sold bankability what the bankable ’XX? as about volume using kind now? could of well the in And

first end then take that. little maybe call more me Aschenbrenner a the of So speak And EVA. specifically on let Peter

of high on tested initial at then least now when cells in across production cells cells ramp bring So our the into bias and have about kick in that the a better going to already performance In different to better than generated product see in five reverse breakdown that's performance we we’re XXXX can it going to in continents. current Air heat comes we it going really become see pilot have you're available X shaded when think X Maxeon way sites get we with Maxeon better get different the even different I gear when situations. a think XXXX Maxeon you'll

once question? ramp part get timeframe. steeper Peter we say cover into of EVA the So to a Phil’s expect we you do want I the XXXX would

does fAir Yes this Phil uses of We've glass of as panels. doing use fact EVA a that stack a in materials module plus amount that any and use not non-glass this in years encapsulant five been of encapsulant over our don't atypical product past new for the is work products. we development

of second terms these membrane and bankability suppliers of we've launching been the feel some half year. good with the first bankability currently this of of many in with In as we pilot agencies and about testing we're working in Europe installations the

great. I'll on. pass Okay Thank both. it you

you. comes Raymond Instructions] Pavel [Operator of Thank James. next question Our Molchanov from

Your open. line is

taking for the Thanks question.

we have above your $XX is and in market you more explain kilo QX actually seen Can QX year-to-date now of price math than contract As little know versus on polysilicon a cost a your going spot up counterintuitive. doubled how you roughly works? just yet the

go me Yes thanks. let Pavel Yes that. through quickly

say and adjust the the the course not loss production And that explains are really that contract the out-of-market doing prices to sell using not market that for be for those that consider in the out-of-market. we're and And way second in market things material polysilicon of locked some selling where also part exactly that as because ancillary we’re one come the internally. the sometimes So opportunities we're to we're lumpiness some you we going. we prices a in that is using is looking it prices. of then of expect in one accordingly or sell maybe baseline at we reviewing volumes it tracking what can we're two sales that’s those lumpy But is what is sales and we're periodically market above quarter that

In understood. QX venture joint on that's of assume from line in was million Okay the I loss non-controlling there the interest China. $X a

Premium that because talked the a Given guys loss? of module would JV be in you at pricing why have that recently about the China demand

Yes itself that is ramp so maybe speak just mode. in to is just currently the on JV it speak

up volume scaled we you gigawatt production initiated two eight the also of five know has scaling as in So it's that to at process and to gigawatts. this gigawatt

toward think out expect we beginning a the results begins P-Series the of partially here more as we're I that's derivatives the to trajectory the the what some we’re see that is as expand. JV out sell. factories have JV coming seeing So contributing a the this seeing in of within lot we've you year. to really you I that of end the to cost to are we But see as new low better transition product scale we're you're really what And transition getting coming were to scaled great a think quarters. with that coupled future of got a on And costs factory of

it just community to And operations about your in the steps linkage forced aware this the the Chinese helpful. can well on to Uyghur poly in relates a the you as to also forced one question Got and China as is lot issue Western China polysilicon that’s it final for you're labor the you're taking supply of of talk labor about sourcing any concerns? avoid conversations

Malaysia of we to markets. five really fabs for years checking of back of of for out close we ago that some And we some driven and any were tracing IBC by protocol France all chain. the products Yes produce polysilicon a footprint source of you business carbon supply know not so that we our HSPV it United Philippines poly was out implemented going and with and the from operation JV the low the out the other States the that as for for

of into China includes expanding venture the the have also what factory here product with even of have what to out will the out the So wafers we for we but we P-Series now joint assurances something will also within beyond JV have Malaysia venture that and say customers to that U.S. to the that's a beyond have U.S. and our within the happen customers that me even out that venture that place be U.S. and with give process to same trace soon comes we're Mexicali able that in joint joint our of ability and that traceability. Eagle excuse coming so

with commitment of our of So confident includes Nations we signed the Global forcing to about really the which All labor. that direct Forms feel that also a let's coupled Compact as position we've United Elimination company say with our discussions all compulsory and suppliers had we've certainly

our So good position. as a we about feel really company

Thank hear. to you good Okay guys.

Thank you Pavel.

moment Instructions] Thank you. [Operator One please.

all the again. As there you are call. now will no further Thank questions we conclude

disconnect. may now You