Maxeon Solar Technologies (MAXN) 27 May 222022 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Maxeon Solar Technologies First Quarter 2022 Earnings Call. Currently, all participants are in a listen-only mode. Later, we will conduct a 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. Solar Maxeon of Lahey Technologies. Robert begin. Sir, you may

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

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

a a replay Maxeon's available the on today page reminder, of of be As Investor site. Web later this call Relations will

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exceeded in also is other in freights channel is across equivalent in of and Europe, markets Italy, to [ph] international but growth disruption. reaction strongest Netherlands strong and today net gas seeing like in their the metering where Our supply In especially European our waning, mature Australia. robust footprint DG countries channel Overall, natural more from We're than XXXX quarter and our enabled increase XX% over revenue in volumes XXXX. high sales XXs was DG XXXX, market the our in to European share in DG of and up low teens to first our volumes U.S. XX% year-on-year. up QX the

periods, certain customer historical DG legislation throughout the growth in competitors penetration payback continued XXXX by expect supporting the and driven solar new We premium segment. potential of improving exit market

And elements. commercial residential, first company. highest of in is first products solar step manufacturing strategic DG important have arguably other our IBC tailwinds two DG the the an yet increased in are This North world than the in segment contract by year. shipments customers U.S. America, the presence, Initial XX% IBC a on up to in largest the from demand focus channel the often as the XX, Australia encouraging to EV are the is enable increased the seen executed the a trends and quarter We accelerate year-on-year. the in initiatives and XXXX, count installer bookings began commercial dealers demand approximately plan of in solar we LG for Margins This longstanding model, DG the the to also strongest new significant and in will the and right with signals we very among adoption Maxeon the residential strategic nation's more have Latin U.S. ASP been of the the fourth Americas. new States modules driving April, shipping polysilicon in we Europe for held residential. solar one growth in channel and exit market, have U.S. the starting agreement United in of serve in launch with sizes American we where brand. partnership within In In reputation underway an commence market. segment Maxeon's program under for our order based both the out-of-market industry, of expansion now and distributor. CED While area products back independent Greentech, channel system

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selling XXXX of investigation U.S. an concerns. forced in supply other had providing from we the Patrol into U.S. moved industry cell limited believe has avoid including because first to our In of was commentary to is signing to from past U.S. solar companies allegedly rocked are our and production month, of order sourced most a in the solar countries, from policy and experienced refrain X:XXXX. subsequent physical companies activity Asian was inputs customers fundamentally requirements facilities by example, from new by to Department solar labor event, except China. U.S. an targeting different some that large some Malaysia, to our we'll related traceability Border to This tariff developers, rocked module contract, on low the by to always in Customs the contrast position is reliance say For unusually the disruptions. than active Asia, another Southeast Commerce Southeast investigation we over, industry tariffs China circumvention Until who U.S. zero the

the tariffs countries. motivated built Asian enter XXXX Our in Malaysia fab also to specific competitors the that other of allegedly Malaysia Southeast and existence predates

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turn COVID to to the the some Kai, focus employee like over chain provide to that the had I'm capacity no recent transformation. safety quarter. environment the safety, for we other employee call of on major time memory, this our commentary critical before impact and I supply areas pleased management to Maxeon I'd report Now in for first team;

disrupted already various China the and by in spread war challenged in the Ukraine virus' the internally, well events. performed we While logistics environment COVID-related

container to SunPower. multiple Utility-Scale managing price remains and module this Europe design. this quarter, times control we customers, DG U.S. facilities, We're We crisis on location for which raised strategy can multiple geographies customers includes including and of price, Our in unchanged. what focused global our shipping

gigawatt events, our line logistical challenges than job exit near line shipped expected report lines successfully of our performance and by to with 'XX nearly On on is triple X site X.X regulatory no in X, as XXXX customers' capacity Vegas containers Slide schedule generally Mexico to on ramped. Despite cumulative also that our to gigawatts fab you'll from final transformation geopolitical Las We capacity pleased we pandemic with more third X.X quarter posed XXXX early first performance or disruptions. our remain the of roughly are the I'm our see gigawatts track. capacity and

We financials. profitability we robust completion for turn products, execution. nearing a Kai to capacity focused over are in about that next supply and year. demand squarely transformed me as are on our talk our returning let The confident the call With to segue, to

details discuss drivers and the current last will Jeff, I and quarter's you, and Thank performance the quarter. hello, then everyone. guidance provide of for

end plant Sequentially, volume delivery XXX chain schedules. just in by mainly quarter the Gemini Ayana the to high was another second were efforts of record the We supply finished project than customer were to shipments U.S. current and team range, quarter. our started at deliveries great down power deliveries Shipments more our quarter made and First as the led of increased in year-over-year the in guidance because lumpiness XX% our in megawatts, Europe. expectations. slightly, by this in to delivery the quarter project hit fourth

in took new contract volume result more DG thanks million. manufacturing new capacity, including the up a Total mentioned United a before sequential forward, revenues mainly to markets, our North schedule our continuity basis X. from on quarter-over-quarter. also delivery XX%, of March on Year-on-year, where American top show benefited increase. is with our projected States, were by to grew line more as price Going $XXX effect the than Revenues SunPower increases to slightly our

$X an is line end We some sales. as on our the than are begin with uplift of volumes. country-wide million, countries we of to out-of-market in largely of of material pay This Maxeon not range, loss the the out-of-market sales polysilicon Gross the given which more $X year. prepayments for for $XX to already loss P&L the module this our perspective, system guidance due silicon, starting charges had were the modules made, DG due from European ancillary that our at This integrated of were opportunistic but of fixed from to sales from a leading range. remainder Total top accounted or was exciting more million our quarter, higher high electronics million from end for components XX% than guidance million where contract. cash to supply perspective change came at high the price a to due power for the ASP Maxeon to legacy see our beneficial polysilicon in sales upper take a of excess to $XX we shifting a losses our

quarter, prices an first at purchased worth already. to have the we the contracted obligations polysilicon million XXXX, As through for of update, at which for the at stood of end this the $XX contract million in made our end of prepayments $XX be

metal engaged As in our exploring do to our disclosed deliveries the index inflationary escalation of for purchases earnings resolution release, with price believe clauses silicon inflationary whether update apply mutually discussions clauses, price to question the escalation you XXXX to We in commercial currently acceptable needed. specifically as are these subject not XXXX price today's of supplier, we deliveries we prices and that escalator. polysilicon for a are will the

complete than factories. manufacturing quarter the line Gross impacted the supplementary more and significant, price as material temporarily million oscillating underutilized rates through Supply capacity production for shows the know, you total the our on China ramp. $XX our additions chart highest new see of these quarter of end to increases year-over-year cell levels the a capacity addition in Europe first to presentation X final by ramps But first first supply in this These remain pressures seen COGS, as we Slide the which a basis, margin best related end Maxeon $XX $XX to performance increases. double that appreciated accounted chain with million we factory our and cost to quarter U.S. quarter are was in have underutilization energized to years. year-over-year polysilicon of quarter offset lead On for our from our cost million charges, are of the to transitions transformation. ramp We products was on by to of year. chain track around mainly freight X

austerity were costs are coming ratio during our million As and operating line plateau $XX or with of in we increases and chain measures in transformation. supply this $X in effect guidance to $XX million, in taking hold, million price become minus down $X expect our quarters. DG favorable more range remain as further plus Non-GAAP expenses million, year-over-year

ancillary of mentioned As a guidance a end at cash result loss EBITDA due opportunistic charges for charges this expenses our was compensation. the GAAP operating Adjusted restructuring of to the stock-based under for for and the adjust fees elevated $XX and and slightly polysilicon reminder, $XX.X expenses which range, first mainly and negative quarter GAAP low polysilicon all contract. our were operating previously accretive down excess sequentially net million, sales million. was of as remaining sales non-GAAP

quarter. ramp first Capital guidance low in expenditures in million, Gemini with of the at second the to days investment with $XX the of balance end we its million $XXX were quarter. the built to directly went on $XX were attributable on delivered fourth by the inventories customer U.S. quarter quarter in contracts end our to containers call. mentioned, our our despite in Moving as end of flows from discussed million initiatives. that Utility-Scale our offset in inventory earnings The up sequentially for increase including million prepayment our module fourth the $XX is business, Cash the to increased with range. million first DIO the a significant positive the at cash first quarter $XX cash, sheet. Operating levels, which, days XX XX restricted growth project consistent Jeff to of

will to second be a price new with we from state, customer the foreseeable our Utility-Scale expect a the facilitate in achieve XX%, business, are future where Now, company. to turn stable to the quarter. margins premiums as to focus, are a line that attention those our includes who quarter and first for we let's U.S. outlook At financial premiums of our the market revenue for This gross technology, Maxeon projected attributable long-term model. our for

earnings ramp started In our deliveries our of industry response, our for targets customers year, find mutually this total rising X fully Maxeon run XXXX Slide half the certainty Prices the to in XXX the costs. be value the additional follows. in by of is logistics to offsetting our before to by for X facilitating contracted part Throughout mid-single-digit in expected and [indiscernible] rates will have we capacity pushed to XXX end. mind, Jeff approaching to The to second the situation. the level million quarter demand of also have the be we in due guidance of see at Our XXXX negative cost and exceed of amount $XXX for lag towards a foreign sales see ramped dollar of Maxeon these range to in XXXX. of were until meet module in gigawatts will the capacity IBC to temporary In that sequential we of DG IBC part includes not expect of shipment to induced take X.X are new gigawatt as in slight parameters significantly first half we life in Also, transition of XXXX first the volumes of chain shipment DG flat on million regulatory mitigate quarter-on-quarter. X. market our well containers the terms the Europe year negotiating megawatts, panels XX are include as faced be quarter total challenges we of Maxeon our now XXX times our at a of Utility-Scale to ASP above X which the quarter costs, supply long-term U.S. reflecting project in as largely radical also is agreeable XXXX, And, and detailed the in and plateau exchange contracts. solutions delivering supply. partially end well megawatts, and second decline shipments estimated volume can index-based increases are to guidance to an fixed pricing elsewhere. environment. million, below slides. breakdown the as described, impacts second in as a the first With that as Revenue upward We the Please attributed megawatts $XXX below range contracts, in our supplemental

our take the X as consistent gross the with which the margin to guidance by costs flat ASP by shipments. accounting Non-GAAP full the higher to in offset the Maxeon roughly $XX of of X. early our at inventory expect loss mix in is U.S. end Utility-Scale projected costs margin rising sequentially Maxeon of driven ramp XXXX implied final capacity we the for quarter, includes write million, down from as is $XX negative As Utility-Scale project reach which be as well to midpoint, transition value to to Utility-Scale related Gross range guidance are expected by a also is of to million ASPs in DG sales. to treatment a gross of we new capacity, charge

are plus expected saw Out-of-market This quarter. the lower in present markets. select We be polysilicon quarter, first minus legacy becoming are are see expenses $X million a are sales Non-GAAP $XX the marketing million. on be contract prices growth this and or until contract end of financials to in the $X significantly includes million now charges and this the higher in we ancillary glass which terms expires freight quarter, additional our level market increased operating aluminum, to sales spot in further level sequentially projected the slightly second year. to closer no and also to as in $X investment pricing million in

well to next Maxeon plan X plans will X for ROI in lead additional for in Adjusted We falls Maxeon XXXX projections. expectations to on Maxeon to various be as our to expenses of Maxeon the that annual be quarters. business considerable the our and Maxeon operating progress of and of of Based lead $X this X. availability effects to conversion to XXXX Capital of of million gross and and revenue million. reflects for million update be to $XX confidence believe this at as added we development ensure the spend, to million We $XX profitability over to second quarter trough million from in Maxeon we X provide X for spending is of $XX the $X capital the This expect $XX that tools, plan the expenditures terms will next that loss results to that on This half, the the guidance time this to long levels, as stated attractive to our range million expected see tooling annual transparency factors million quarter time guidance second incremental our the not X. million second million even $XX impacting operating are timely in our growth our affect EBITDA several finance is on guidance expenditures range and did expenses. approximate is one-time $XX quarter this $XX these and CapEx previously the the include another long expected negative keep our $XX its year. XXXX XXXX for expected also conversion. million negative more within $X in to are the million trajectory based to in

dependent or appropriate majority the with of the longer reach expect strategies we is track funding no to be amount. XXXX chain before positive, and in a consistent but made that been question model we in that, gross regards considering ask making several discussions, today ASPs our regarding on and XXXX. our Utility-Scale global timing regularly DG instruments polysilicon. future out-of-market our whether are progress in of is have cost One required final go comment on are to those, in outlook. plan within be number believe exit the been that back we to Therefore, prices a will markets, in to supply of has term model. decision are turn With adjusted is mind to And important We elements on financial currently us long-term With our we one U.S. in deliveries our In bear changing Jeff to business EBITDA Q&A. is meet XXXX contracted normalization? our raising people our of DG have It in positive excluding our margin I'll XX% control. to call long-term we tailwind summarize as DG XXXX achievement that financial the are with and beta for we to we

in our supply very of of we are Thanks, the Kai. continue especially I unprecedented to chain be making progress proud Maxeon, an in environment. transformation

and business, Although increases significant our they this a transformation have impact are cost input on temporary.

the As full with cost of our and increases. Panel catches better factories march the toward channel utilization we new Beyond products, pricing market with and up with addition brand monetize our differentiated our products

foundation our are to strong profitability emerge resilient and and within reaching us growth in We building reflected company have the financials target as a that XXXX. model

entered who the we been by existing to like I'd we customers customer-centric questions, cumulative enjoying of our than to in benefits count XXXX, the company, million mark. thrilled forward solar we've X our to change we more first milestone highlight. their look Maxeon million we're the in have excited powered Since engagement there's superior focusing more X to that for equally a We're XXXX, customers more are new globally crossed become this achieved with start Maxeon. on powering DG journey positive panel customers. and million Today, In technology. quarter segment announce and to the More Before are customer measuring are cumulative customers. one of taking thing

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

Thank Instructions]. you. [Operator

comes from of Vrabel America. question Bank line first the of Alex with Our

open. Your is line

really seeing around for U.S. lot become a we're DG My your in uptick to show a taking say, questions. world. in in the you the in addition sizable let's your you revenues pricing segment first flagging question, that P obviously Thanks IBC market obviously untethered, of Series. you're guys. bit And power guys the for little Hi, both the and can that

Just a noting you going freedom, you volumes do moving partner announcement think the put lot as that curious, distribution how of morning? I this sort those XXXX out Thanks. two have let's into into and say, about with the you buckets more guess also

a ways. that Thanks, in Alex. Think few about

of the by X.X capacity with midst reach X the existing gigawatt we you Maxeon in are, have, The know, our first a expected the scaling is, end the full to That's as we year. up of product.

opportunity So we'll really way to open is the comes we're of X The us be today for our fit competition a have with look in shift great we very over under at SunPower. U.S. will you be X the our the about Max over certainly And we are in we X from door exit And as of X. able some Max a gigawatt the also well it with transition. additional that there, volume with that excuse combine think does agreement broadly where compared for to to gigawatt today whereas -- the if product. sell it's me,

we to within other ship maybe markets we at IBC to So healthy. of be very we're doing ASPs we likely is very, into the have expect achieve what which can going parts that than looking be where lower U.S.,

in some from into shift or given also the a geographies going but demand see cost lower you'll product, So resi. geographies, for see resi, price in cases, just we commercial from strong lower

a approach. side. that. and on that I just this the sort follow I bit more it. Got a of appreciate potentially really AD/CVD watching just closely And stick know one angle and little are call on up hoping policy this many carrot be may very of there then

are expecting that on been as to what event obviously and you're case whether have positioning update, through. shift and time base, been Thanks. were that guys timing What's in gearing And as I'll some legislation that thinking yourself on. U.S. there SEMA it I for the downside You quite might about where the for or how you up in your you operations pass a manufacturing have to elsewhere? in watching now far the guess, go latest

Sure.

as the that, of can well cover to add the Peter first me then as element AD/CVD discussions. that Let

still of hopeful passage see we a closely are that and DC activity another. form watching or First, obviously very we very in SEMA incentives one in

are, say, would ready We go. I to

as ready at to, that that probably we ready and the in and to site selected plan I that hope alluded the Mexico prepared Malaysia. we a have have also would start We it within as event at the In look to have positions happens. and notes, we're we leverage close expansion, the something doesn't, running

Now help pick and certainly certainly, bring of in to from U.S., still up Peter, want to you a fit the hopeful the it happens up jobs we're to something we a that lot build great U.S. think the in a supply there there? also Americans. and be chain will great way

Sure.

in in next happen months. being a a starting doesn't a So specifically what on that activity to happen is fallback House we're about to scenarios to more similar the get think some cautious identify summer. still around potential that fab hearing are the There bill that what path is pass. case We legislation with sometime reconciliation couple the with we're the that respect on, airtime But there fab, that that hearing to needs optimism the done that White SEMA could to and of would that for framework of for bipartisan is for reconciliation effort require something Hill so going legislation. are that the this

such and to for for we're We've just And market, the I is just Performance capacity incredible there IBC for on both capacity U.S. expand us. a Utility-Scale more add demand for side seen opportunity that just Series. highly motivated so would the great

back additions distribution the at just pervasive. driving to the to CED happen. with Then the from We side, motivated exposure premium the was market. is within just demand a well a the with U.S. you U.S. a there highly that Europe for that weeks getting as we're within Intersolar that such Europe, announced deal demand perspective at panels DG make we're within capacity and Intersolar premium now overwhelming couple so the just for we're On panels few

pass Thanks, on. guys. it I'll

Alex. you, Thank

Thank you. ROTH line Shen comes with of The next the Capital. from question Philip

is line open. Your

everyone. Hi, QX. talk year then official get do first taking you you wanted think? in know beyond I Could the to your you think being weaker you've back XX% through about digit the to half being talked for of half guidance. back my that questions. and with past, provided to But the of you could the Thanks year the expectations outlook you still do I margin 'XX. in Thanks. this What get path? QX? in to Do consider you stronger margins double haven't

Thanks, Phil.

to talk to maybe then Kai I'll first the driving about it numbers. on that, the or at Let speak are factors -- some specifically me answer specifically the and hand that of least over to

'XX XXXX now Maxeon Maxeon all beginnings what as this trails X. got and it seeing this the transition and of as over is around for dramatic into to labor. XXXX, of way so us of company to has story our of of a that now X going you're was stayed half And we've the company, in and and the think despite been really over would out Maxeon see we the XXXX, a the to was And really to second think I play really year it, First, about the from a that all on a start pretty is the the same, fruits that going X then half you world. transformation the plus some course as that story to

the we to see XXXX. the end you'll hit So by time that get full-bore of

increases prepared got price We've that talked the remarks. about So also that contributes. within I

going also then chain also to think up I supply bringing margins. and tick our and gap the increases AC to storage going pricing. you're with America cost also close And that residential and see better help North that add the panels between we're you is in.

on margin going really that's DG just uplift. there's a giving that So lot be side the to

of think we story the ramp side, I needed that is are the ramp. that the we in to to early and real stages factory just Utility-Scale On there continue big

the into So go into and margin we capacity into costs XXXX. full give even and good 'XX especially that. be we UPP expect And going beyond as will to that we that get as us lower help market

translate prepared So, ones mentioned fundamentals, same much for expecting are about is the in in talking And many Kai, I'd to as say of into quarters. those Kai start we're remarks, hand what to the you half we QX for the more of trough there. that as basic into second we've that, the been all ago, going company. from and to see let financial transformation that as predicted benefits the me a we while over the you're it get

margin losses on on DG fourth would we and of even the the DG, see EBITDA positive speak, we as DG Yes, polysilicon space the possibility is the the in I are positive one that gross space. taking already In also we are the to just quarter that sales. add on that, things out 'XX and ancillary we the expect of

our deliveries and our than that was the polysilicon accretive we we prepayments So and moved forward the that and payments first into had we the outstanding because described quarter. on market ancillary supplier we we made to suppliers and the have to as the And who loss make have taken in all for these those. quarter the got prices first from we second pulled margin are the lower

going second of half regards of transformation. So cash coming of factors to out got to for on coming we that. that together basis, we And are where head the with this to additional we other money all and our the a in quarter really this are things second a quite climb together then with believe lot a year,

this financial of taking output a ramping right and then into going rough, up to lot of of part That's And this get the great pay of ramp dividends as Series U.S. you're from a that that factory, 'XX for a in just the tough as the in us product certainly is transformation. are half and Performance that the QX into is where medicine and pretty now. we quarter 'XX what's beyond. really We this but example is back

pricing, you potential for this the see it's a margin taking with are And you you And in been you cetera? through variable those Specifically, based of structuring pricing you've you -- Thank ultimately some or Jeff, pricing talk expansion. you the pricing contracts indices, or the about that. the et poly you is do driver how of Okay. that increases, Are price? price or are mentioned, contracts? pricing for on structure can whether fixed talking then containers both signing, key freight to

opportunity is, how for guys you this as to nice the would I Given margins. a market strong expand see really

on the know how you So and there structure margin help to there? talked content we a but the bit, the us downside good I understand Thanks. feel protection maybe

that kind reward more is as our that a our comes help us partners' a add Utility-Scale on a those the U.S., company risk you in we've Sure. the engaging lines allows pricing what detail bit it's the from what really allows customers. provide And relationships, And conversations those us costs. with along over you And might better allows There also great the I'd market the you're with really it's us in gotten lot what on demand. help right. with additional Thanks, last what allows say hedge. probably the of This of few already cover the looking of Phil. this little along that on customers, for a negotiating to we're really as weeks indices. which we've hedge keep that envision XXXX And what is customer know goes it us costs. of as an doing because you expect, input handful the And of contracts, along to but capitalizing with to way in this putting take big with doesn't indices away the key is example stability. for majority supply share then the price a current to really that at, and the really to an can of done to situation Again, our it being us U.S., walk exists some customers is that a us, in right, that, really but and we see of of blend a that

Jeff. Great. Thanks,

You 'XX talked up about being already. booked

or even call we talking How available that expect? was QX of the booked been I XX% versus has Are that think XX%? to the something much case. 'XX you capacity on closer about

but number, would say than XX%. it's -- less want I I would to give precise say don't a I

would So 'XX negotiations, say, we're the of volume. majority the I in still active for

for question last Jeff. One Great. me,

that. on contract, the On CED congrats

you. Thank

SunPower were in -- for supplied your sold primary you've they be what the Historically, megawatt could What's CED and for and sense the 'XX? customer. volume everything they that

large with substantial a that Now player and a that you're very see volume volume you of of CED lot demand. shift Could to diversifying, distributor? is a

think that And the channel LG give that through a their looking specific what have the you'd panels. of that U.S., so architected see market, benefits number, that maybe the say premium of would for then panels. that is you've right, in goal stickiness we Panasonic around but traditionally installers or the go the the after much you I rest used got helping what SunPower CED I channel really of panels where I won't the go of have us is our at

there. So a lot see we upside of

see from at beyond. other to will how lower where again, from in got it, and something want think view with be areas of have will there I but grow. ASPs. something it's we it's pricing I over don't that to today, 'XX looking to we number opportunities out terms divert that volume expect course there That really good to trying hang going that a growth we the we've the of really be and

factors? ASP the And the key a so, ask what it might up if or follow there? based you it get? lower anything of to on you that is relative areas able drivers there based share Is or volume, there. can the volume other are decision just make on be like price they to And price that are if Is to the

Sure.

the we on that. that demand you for that there's there customers. lowest And they the volume we that the of the in drive And will out lasting, It think, think priced amount highest that know, panels way a degrading panels will efficiency, immense captures longest I an have in predominantly with market. be looking, as based be value will right, have. best I

I are very seeing. think initial with indications what we're positive

capture be So volumes, think good priced for in and develops. a us way very with high relationship it we'll the balance we APSs to as will that

pass the for on, Jeff. it Okay. Thanks detail. all I'll

Goldman next comes Lee from Thank Sachs. you. with the Brian question The line of

open. is line Your

margins those if Hi. you three talked for to quantify the moving and higher Phil's half? the guide. follow factors impact through cost. the XQ Grace segment cost, up wonder aluminum of It for inventory today. seems guess by you're [ph] question can the Brian. about; then I up the questions just margins just positive IBC getting And ramp about I Thanks on write taking wonder questions. is the if second earlier, talk your like on can This first you down the you I is

what any should margin half P margins follow expect And of this I chance can XXXX? And year? exiting then we positive see So have kind Series, on second Thanks. in the we a up.

Okay. I'm Thank hand you, to Grace. question to that going over Kai.

question, Thank you Okay. the for Grace.

second XXXX we terms of had of our expect above fixed the that going Series quantification more up unabsorbed prices said and ramp in first are product. that about so cost to few getting costs. we've terms costs quarter the current XX also particular guide, for There we to underutilization, by in be that up going the the have the P million U.S. a So ramp of go million to quarter, of still product in cost up the is general higher we addition quarter-on-quarter. than we This general in for where are for that

that up have cost it's -- was item bring a of supply aluminum, terms that probably a million that on costs been basis. also and a third In mentioned. chain the you going would other quarter-on-quarter few There by up,

second moving half Series. my margin the think I was for by P segment question on through the

better. taking Okay. And in shipments are legacy that moving of expect also having the Series, P through without be gross we part say a expect second exit then and that the the are already depreciation as profit still U.S. the account. increase, positive going to to I contract half, on quarter, charges the level fourth the OOM we as and positive an and half that OpEx is into currently contract. on the said, uses Series the we second DG, prices we be on are that on P the our big would first And we we in by quarter to also the and EBITDA get in rate to

P also depends the chain second really are we're projections And lot the half. a So on where margin not costs making Series. in going for supply

go implementing that as what pieces on will DG also go half, talked would into to into the we've significant margins price maybe give about, think other that's something and I we more are is Grace, add we we highlighted, that the as half. the as increases one uplift the second as scale that products the kicks as And down. Maxeon second get is as margin the some DG, Kai of we of and X, into into scales dominant in prices up, which well going economies

to help margins. going with also that's So

your deal I if Okay, color give with got on details. a Thanks it. on for just wonder CED, bit you the can And then pricing. more

I think you talked IBC lines. XX% about for target plus of margin gross

So are plus those margins? XX% you selling volumes at Thanks.

Yes.

that. say in when second numbers about I into new that would see XXs. say And the Max that, you scales, line the typically we we usually So like product IBC, think when you see for especially talk that with a margins as look that and you as are half launch we we I'd X is margins Max when that get X,

this AC adds One to of the of is the that other pieces also the addition panels.

But on to installation customer effectively basis. per about do. adds revenue it also we micro-inverters is and a being this percentage also brings the good XX% That our margin panels. attached So that margin XX%

it's going into introduce we're have AC is another to a of we of space. And to margins. that harbinger good So that to panels, the adder also as that grow continue which the storage we future nice penetration

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

you. Thank

of comes question the Our with James. Pavel next from Raymond line

Your line is open.

questions. taking for the Thanks

has war zoom in XX% started? sources demand, of quarter. that Europe the of on this Let within in countries, me terms at revenue since changed of your The specific Europe, mix all

that that percentage on the grow would overall. the seen just I really. say a have channel demand basis, we've Not in base demand

XX% So seen most not to, panels a But prioritizing care share, needed, margins. market a sure for have of where other where we demand. better we would share, get that need surged. a only markets, surged. if where dedicated as than has Italy markets across taking Spain where say the I at where all just but of overall Europe has they're got demand those like you like say, where we've look most make we've surge to to in example, right, the of lower I'd But we also we're, have We're market just partners, greater we

customers one Okay. is tariffs perhaps and thing suppliers year. are, concerns sell had reluctant this are are of question reluctant product reluctant On you any that the in to tariffs least that whether is from is, customers are we've be U.S. AD/CVD, of the Asia on might beginning be Southeast retroactive retroactive? clarity the observing until of been to about buy to there at Have to which whether take because might

probably I But supplier. heightened add we've No, If you Peter, faith level the little we've as not. more of anything, a trust of want do a seen think us that because goes to color and into demand perhaps? a

reserve customers any future ask or reserve to had haven't we tariffs. us Pavel, Sure. for

basis. we tariffs not targeting our not I speaking, on company. allegations will be that resemble think the does in my are confident to broadly think anti-circumvention of exposed model And really a we're China-centric that I business that

latest more for the And in venture? Okay. level China, the the on the maybe context what's domestic on Chinese the And joint of JV? of speaking the some just market of broadly demand profitability

So we product. pricing tilted it still seeing be still the in China. demand to toward place are we seeing That's strongly for tending domestic best the where are that globally

to can those make look and deals now elements developers beginning that to hedging a at of take are some us. palatable index other some that We increasingly are more costs, looking

China. looking rest still I it's would Utility-Scale early We world dominated within going say by China, that. today outside translate that's if of are with business too at into say and Probably strategy of to but business the going our back us to for more

guys. you All very much, right. Thank

Pavel. you, Thank Great.

[Operator you. Thank Instructions].

Kevin Our Pickering. next from comes question line the with Pollard of

is open. Your line

run Or of delivering have a it's business. product could gigawatt of us ramp be and X.X the you're the the quarters? U.S. rate a you I one for of couple at another way, of I guess Utility asked that now and when you. over running of questions kind will couple production maybe kind shipments? up the first next you Thank is on give the roadmap

Yes.

X.X our in capacity on up of speak, you know. by early process full see we by get time ramping, in are And projection you'll as us we as to that the is to gigawatt. we So that XXXX, ramp the XXXX,

And Okay. then, I guess talking the margins. about

in initial implication at margin the You With that the is won't since the quarter charge the just QX. to down of sales, here losses with current run book that charge taking any through you're you're taking in those zero the write a this point? further

in that I'll ask question. on to weigh Kai

charge a end take we Kevin, to inventory at hand second have quarter. So, that the the of on we on expect the

test move negative. we at test are the the that as whether we end or this than we got are write we we down. that's inventory the we're get positive and inventory prices gross will to of having valuation So quarter to in market, on, higher every going margins do the can if And

over, of it's we a this future to that And we just things we of second we at ramping, moment. So get pertains but of going ramp end all cross are projecting as the down come are not product to the quarter. quarters, as not exactly charge When as up, taking scale. into start cost expect, at something are we inventory we course, the for that to the

you And prepayment that guess current the for you favorable sales protections, flow would come XXXX. index in I in helpful. situation? of the you'd some terms expect then very were the helpful -- start booking the that's some those do the saw with reference last that cash of question, more those you quarter Okay, to that recent also to with expect bookings

Yes.

So they expect I that would would.

think something -- good have way. it's I given a that's the prepayments especially that a business, the very to come of think is And demand. I in us part favorable that healthy

but by from engaged. be would It basis, we we're So might it's and deal-to-deal vary something large, looking a that prepayments. at

for all Okay. Thanks. me. That's

Thank Kevin. you, Great.

Thank you.

up We from line have with America. the Vrabel Bank a follow of Alex of

Your line open. is

plan as are you a throwing touched in like through Thanks. I far I if to partners you've this to you if market, curious and wanted talked can one Thanks, this on just kind there's can speak SunPower the that sort in know will, if you which talk of you may, I but does your actually the It of what for streamlining guys. you to sounds and mix. its I that, actually for in of know targeting space and about I'm sort hop optionality if this but too of this could all? rollout, though, you the don't of flow lens? you, guess if to One know much. speak I many mean, more I are But here, obviously hat dealer sort like the I economic here, pretty have about impact guys an from lot economics exciting. your as what you it you platform for the channel curious to at of how how kind how or communicate of

Thanks, Sure. Alex.

we I think little different with It that we all residential closest is that starts that this have. best what coming strong the standpoint a our the and approach positioning panels space we're channel. have, makes that have, into from of the the channel of the brand we really for the

suppliers when so with we that piece we little of then globally. partnering a us -- other are I other kind really product the different And best-in-class that about would say makes is

for them product, And So, in great very for partner the us. it The were for we storage they is to working us. through a strongly AlphaESS channel their example, make really we're Europe, our footprint, with who strong to has they kind we combined as product, get a it, access from were white reliable, for us. label Australia, is benefit they effectively get get generation fifth offering them, a of able from looking benefit

has that saw AC able a we're in with happen that the monetize so margins. thing same way And We panels. attractive to

chargers We've be expect announcing educating selling that about customers. got the unique have a EV and that the year. to of We half way of in we've that second talked we

goes the probably the of I the broadening really look that customer Panel us at us and as grows, potentially quickly this back just growing But wrapper ecosystem that has over the it you calling separately expect the it's again rides One of of offering, around it. to app start to it it that really going out that SunPower which better kind including would relationship monetizing and of doing and time customer be the So that on engagement, with time all Beyond job software when right. channel. is into engagement would a

transparency we at expectations the growth that something the how but probably growing. you future, we in we'll give will do numbers certainly now, think looking to Premature that given more are those have. that into I So be

one would that. to Just add comment I

close with earlier, have we that it adds DC doubles if -- DC AC mentioned the panel add you a a on revenue. would a I customer, you then you storage go basically if panel, that As deal revenue to adds XX% about the more panel

So very the revenue us, it. again, sits and the significant for channel at we the look to panel you that margin back have of at that added really going with foundation

the take Thanks, guys. rest offline. I'll

Great. Thanks, Alex.

Thank you.

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

disconnect. You may now