Maxeon Solar Technologies (MAXN) 19 Aug 222022 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to Maxeon Solar Technologies' Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to conference like speaker, to now Mr. would hand over the your I Maxeon Technologies. Lahey Solar Robert of Sir, begin. you may

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

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

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

make Investor refer statements non-GAAP Relations harbor other this deck described as press that website. will Also, release, today's today's today's supplemental are on earnings the both as to of to call. slide we well available slide press certain risks our during and measures are of X-K subject Maxeon's Please which SEC appendix of Events additional that today's we regarding will call, that reference Please various to let as to a Investor comparable in see reconciliations. measure Maxeon's the today's relevant Jeff Waters. well CEO, page affect During and non-GAAP forward-looking Maxeon's release, factors deck the me that, and presentation, slide documents GAAP are most filings. also Presentations uncertainties those as for of With safe turn information GAAP the the for over the of directly posted a we Relations on presentation call, website have To the supplemental these those enhance may forward-looking statements. call

review and financial with and our and our achievement detailed everyone. performance I'll we'll a transformation and on and our long-term Kai update outlook, Maxeon's of Rob, day, ongoing toward Thank will Today, good financial model, Q&A. conclude you, progress provide

DG legislation to extensions tax recent We this I'd passage all, are the of more new long-term means tailwind of consideration The be businesses. Act Reduction the investment utility than credit acknowledge to Washington. both and in results year couldn't more what and of it after with a our the Inflation pleased Maxeon. to scale First a like

reminder, XXXX and have DG the commercial on we this utility commenced day. our As X.X residential scale and And just launching U.S. the last are a installers year. reentered to directly quarter already shipping nearly per gigawatts side, channel booked business later we in

well content known very We a We manufacturing. increased facility year pay are preparing U.S. a catalyst site Maxeon to we design manufacturing, the and SEMA. to road for incentives also bonuses larger which were least, residential exactly thrilled is respect Act, of more to previously implement see provide systems, legislation. And for spent of and the objectives strong potential to but Manufacturing not ITC scenario as financing. of this should for well the supporters key support demand decades. inclusion pleased category Energy vehicles, been has domestic electric Solar for where efficient as the the expand Maxeon strong selection, down and with leader see solar S. and proposed for America solar are direct believe last U. under a for for domestic provisions We a positioned this over

proposed top growth XXXX Our significant line for has drive the Maxeon beyond. bottom to facility and and X-gigawatt in potential

at team more project project We have Analyst this and upcoming on reignited our our to burn, we'll share details full Day.

Maxeon's quarter. second about Now let's talk

in we transformation. our be reflecting range, EBITDA and will our hit In believe company in what our company guidance exceeding transformation. adjusted both revenue We addition margin we trough guidance, to the volume

important We also achieved strategic several milestones.

total technology the refresh and demand our IBC feed year. and the in at for production a one-gigawatt these X, began allow Europe, will bringing over DG we This us over better the supply Australia strong. on to and very products our Maxeon to are where time U.S. channels Fab site ASPs X our second increased first completing in capacity largely for production First, line in that IBC

with started X-gigawatt from solidly are deliveries XXXX, in our backlog we Modco, U.S. volume out scale of contracted for Secondly, S. opportunities business booked shipments contracts of for through the for our bifacial into extending panels out Line supply over beyond. at we and utility U. Mexicali longer-term our Performance are looking in and the locking XXXX

a operating elements key site with sheet. Panel. existence, on well and and including that announced products expand further with as our EV We balance delivering map, including two on road Maxeon Beyond the is XXXX make of the environment focusing such a long-term of the sheet our a map, bond and storage Beyond and global the XXXX. achievement strengthened are we around breakeven balance system model offerings short, And transformation Maxeon other margin and we Fab software Finally, reserve healthy SunPower Modco end clearly and further gross the introduction of of to while Panel Performance offering X on In a quarter, within DRIVE our since charger and in the our battery to over product our One of of financial set Maxeon Ensenada revenue our grow as platform. Line details well despite convertible margin $XXX into allow investments X million believe positioned end by of challenging will years as our we our facing the our deployment road pursue

of through lens with pillars leading beginning Now execution let's quarter three second some the our panel technology. details of the strategic growth, cover

we the HSPV produces of these also HSPV joint technology While our we're are known space pioneers a gigawatts our China, Performance Line. within for best sell and sells shingled and IBC in Maxeon is panels newly DG, our product cell multiple primarily battery types introduced market, we In technology, and modules volumes the and our with leading on panels. while players storage Maxeon increasingly Line our integrated product. focuses panel roughly the with DG electronics similar power and reserve where soon to sold sell IBC both Performance are venture global

IBC supply Line residential surging address our shingled our as significantly reallocate performance allow improving us The and continuously our of IBC residential and to and of PX lower supply sixth will are demand commercial the commercial and most technology, channels. in ASP to capacity in PX higher to with process Europe. supply in we're some the with panels such our increased of and cell products panels markets States. generation perhaps cost deliver introducing increased higher opportunities light our As importantly, the United Performance toward

report Maxeon fixed megawatts. Maxeon IBC, to of to that Speaking we've with I'm capacity a fully X total approximately Maxeon XXX X happy from transitioned of

will and way achieved mission evaluating homeowner and sufficient relative near a conversion energy provide begin larger to further and we Considering and Maxeon liquidity line Maxeon to details favorable upgrade reliable moving size, household electric customer X to X panels add adoption to to of X. longer, more wafers during the fundamental has market X same end Our and our needs. option staying pumps also of are place, higher Maxeon Analyst ASPs enhances change vehicles we operation. more best the Growing future. now the with from the benefits in the enables efficient causing to pilot in is the the is with its Maxeon in And value heat Day. conditions Maxeon our and X Fab now liquidity plan the during strengthened position, project, of X we

the differentiated sales software storage as XXXX QX the launch executed with they and of strong significantly behind revenue our In shipments in our business. demand and a to Australia, announced hitting climbed expected percentage scores. posted fifth really sales for account challenge well France, price is targets team In a is NPS year quarter the team in a the our Moving for channel. around very now exceeded and remain where logistics QX. in our and as delivery moment, materialize but we DG products. to focused to energizing shaping record end module mid-XX% customer the a customer of DG range in Australia, second exceeding increases for the Europe, up Netherlands and the and AC quarter installer majority. timing well, and only consecutive executing a Supply also end attended roadshow, targets battery at

by a complete brand end Maxeon's decade in customers presence reputation with of most and are preference for top for quality SunPower systems over key service. clear customer long-standing a provided under a We seeing and markets

offer up continue of financial opportunities a believe BBVA's providing products our in expansion Pulling Mexico, lead their that unique Beyond We customer our lender qualified to partner report the broad part financing our customers in partners We're Maxeon to pleased partners see to to channel Mexico business. from be and We are offering. an bigger with Panel to offering. the base. terms back largest the and also DG to this lead picture with able our generation are installer the very long-term moment in will campaigns important BBVA,

We as only a now believe We us XXth leader, combination in with these are solar solid panel are panel economic moat. two factors our the technology at solar scale. global we direct-to-installer the provide a the and model year manufacturer of with

product understand Our strong of brand. differentiated under who products selling a a installers the premium attract benefits

with sold influence to us the and Our for how conduit end channel how a is the opportunity much. the to provides product and customer

the full the margins end. In to we're expand XXXX, first well from gross still contribute offering. Conversion by X of and somewhat isolated our expansion year of XX% Maxeon should years. in positioned short-term early Panel will than we will its with mind that further solar Panel our volatility our that of the X Keep in more capacity Maxeon production, margin project Beyond DG to X a result, include market full As in and DG Beyond Max are our business Panel business year's attach tailwinds provide rates legacy days. and XXXX continued X significant the Beyond following Max

scale is utility pillar Our strategic our focused third effort.

All additional here variable volatility. a execute structure of Our we well. agreement designed We X-gigawatt contracts contracts using our signed margin for two deliveries very continues XXXX. to over partial sales executed first team and in new prepayments, reduce pricing also include to our

by of to impact affected be While costs COVID-related suppliers our of Performance the China. near-term in equipment tolerance ramp chain zero continues and on supply elevated measures Line

a continuously now investment, the U.S. improving now early OpEx Our more rate at this and announcing serving closing, April total value. each and 'XX. contributions a standing our in After long-term unique toward competitive revenue and steadily expect level, advantages than our is Maxeon been ASP. at initiative we've bookings late year, prospects strong, summary 'XX with In X.X-gigawatts. the Since differentiated a we and double for shareholder to run increased business between on nearly CapEx last based of the volume of year are with backlog increasing large-scale

days SunPower and has in to do modest healthy revenue engagement scale a the unprecedented the that so our EBITDA utility with levels, to grow and structure legacy Our OpEx to facilitates counting even margins attractive market generation. potential our

direct-to-installer more Our our expected platform margins, over sharing the these or call gross our the business to DG over Day. for components end panel to time generate to I to and to I'll Analyst it of that, forward and a and are our markets has differentiated upcoming highly vision to turn model. at the evolve systems look markets a technology offerings channel, serving potential from for With XX% higher thanks two Kai.

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

the and were the sequentially, our commercial April. shipments The thanks of in exceeding delivery exceptional our guidance utility range late Performance initial and joint this growing Second customers were from HSPV Line which into to X% products XXX efforts to quarter quarter scale majority market, European shipments venture. our commenced deliveries megawatts, European U.S. shipments

Performance Europe shipments new mainly On result also blended the as pricing. Line well a to increases revenue. range to higher ASPs initial scale. the States, including basis, American slightly an Revenues $XXX module North a benefited our was Line utility shipments both growing XXXX were of as and ASPs price for in Performance United a from and XX%, increases year-over-year of DG from non-panel both DG due to Performance of exceeded up DG guidance contribution the X% a first We in a well, $XXX sequential amount Total full overall in and increased volume. saw we're on Line flat on new this in DG sequentially where both quarter mix SunPower sequentially revenues the also facility. as grew price basis of markets, as

non-panel increases sales, While the are lower-priced Non-GAAP and to expect higher completed, of a came term volumes near share $XX Line gross price expected at million. to a of in ASP trend going offset mix loss conversion as similar the IBC X grow we with see growing to overall in by forward, is a volumes. Performance

million capacity gross million quarter for in for underutilization included headwinds U.S. charges or end provisions of in market $XX impacting Line quarter products lower our market. $X loss Second Performance and the ramp-related cost inventories

continue polysilicon Our gross offset to compared to which prices. impact have affected ago annual $X.X of cost, million partially charge price loss in gross Note by million cost by $XX included estimate of year year-over-year. increases a be chain we Also had elevated $XX quarter. margins were to million supply an for out-of-market chain these increases the adverse did supply

quarters have that For we in our any, the prices long-term we significant of of contract, ever charges take-or-pay closer experienced in than two market to if past. out now, prices fixed the underlying several the polysilicon what less gotten contract quarters market has remaining and in expect the

end second in remaining for have made quarter, the our we stood under at the already. million, As $XX.X million obligations at $XX contract which of that prepayments

$XX.X We contract our of previously price to dispute clause. escalation the alleged an polysilicon over agreed inflationary also with a our settlement million trigger of supplier disclosed

XXXX. payments As X through January of a equal will result, be we making monthly

facility cleanup remaining the for our came step Second $XX to efforts the is than GAAP $X.X the for the negative our million guidance. margin This factors. quarter attributable expense manufacturing guidance our includes charges continued sold in $XX quarter cost goods $XX million, austerity Adjusted in our This of of is final during GAAP related and settlement, million. network. range. Non-GAAP post-spin operating shutdown was primarily better loss previously the The of second loss, reflects restructuring the was were manufacturing million, in which expenses $XX with in-line our at included charge the was EBITDA transformation. of sequential million, $XX to module million. decrease France. GAAP gross mentioned net to operating

second to levels, loss net balance careful management Moving as including million inventory capital in $XXX $XX million, to by inventory to of negative and our quarter increases sheet. partially with million cash, XX from recent due flows utility cash our first million cash from days sequentially the decreased offset the items bookings. other quarter quarter. Operating net Capital well due in of our the management. the in million, somewhat as second range $XX to restricted and expenditures prepayments scale increased Cash the levels. careful of quarter expenditures were the DIO from at $XXX guidance XX capital days end working were loss at than went to end $XX lower

recently TZE's shareholder, date. future other success. corporate projects, five-year This in our two-year transaction also Maxeon the project, working and provides X we has possible general This convertible highlights pays maturity a mentioned, coupon X.X% a Maxeon's funding transaction conversion Jeff confidence capital and As of capital to conversion ongoing continued issue and our for provision investment $XX.XX commitment $XXX share, a million hard price to and bond note a a per The private announced TZE. purposes.

quarter. the outlook our let's to for the Now third turn attention

significant going XXXX levels. mode. below ramped capacities on are that forward, our quarter deliveries the of be top-line improve will XXXX tailwinds that favor, previously is turn margin lag We and impact contribution as balance albeit be will scale significant as to and when the module expect leaving our utility the P&L and from are to margin bookings be priced the ramp factories the U.S. quarter in will still guided. sequentially until The customers, early we to QX will first in volumes cell headwinds current ship we expected where were second trough complete fully but that the

products pricing our will that variable Maxeon EU bookings expect and DG mentioned, on quarter mechanism third scale higher this our Jeff in negotiated recent utility increases in and price various we most gross in margin projections As will from income on the volumes countries. towards IBC scale contributions derisk X utility include the Positive successfully the a future. ramp

financial The top to achievement expect towards is quarter XXXX. of project within million. With $X this trend be earnings this shipments. model mind, $XX both million, and million quarter projected X loss in to with $XX slides. our $XXX XXX contract. and of deliver of development continue scale ASP impact Revenue the our margin a initial towards which and long-term our is million a increase long-term million polysilicon to the is Slide quarter increases by in offset that historical by line to expansion from guidance We third of driven driven largely approximately lines. to guidance gross for to Please financial growth range in mix expected in output cost growth improvement detailed of megawatts, utility project out-of-market breakdown DG chain further also in and see $XXX to our XXX includes supplemental DG be in U.S. the as sequential to We shipments MaxeonX, an in the supply third the follows. Non-GAAP of on an markets from sequential range utility scale is range higher improved our achievement unfavorable

Although plus again incremental on incur million. U.S. be Performance we minus to provisions Non-GAAP are $X expected Line expect expenses for operating our inventories million, or $XX to the

will for drive will to OpEx significant carefully value initiatives very investing in the manage We long-term that continue while company. our

decrease percentage in EBITDA capacity Adjusted the volumes to as of a revenue, negative million of ramps As be XXXX for of $XX $XX in to range the operating expected negative increase. million. shipment considerably and we expect is expenses and XXXX to balance

us financial ask the to to required a year-over-year Third million our EBITDA go stated more $XX the and of million. people reach our for details the quarter positive outlook. be to regularly regarding within XXXX. target than of comments capital to million. EBITDA given We final range from it improvement of turnaround longer-term to our few XX% plan A interest, negative implies $XX understand in $XXX adjusted us expenditures for projected a on discussions, are In

Let Panel Maxeon and some X ASP. Maxeon DG life, me positive X business robust the of and We that topic. expect residential expansion shed by ramped the today, gross half in care levels. margin of to start the gross S. turn become new profitability is Further, will fourth ASP our in Jeff A. light expect higher go is fully scheduled With the X on Beyond XXXX, target X the with Maxeon at end overall cost business. the U. utilized, to occur by the In our DG Q& utilities year, our XXXX Maxeon from breakeven drive the of capacity this growth a I'll of business In we to to contributions year. level channel on call U.S. our back quarter shipping XXXX. we fully back early margin we With summarize an to before we margin business bookings believe to that, improving this led

Kai. Thank you,

progressing exciting One the go and to Next poised investment quarters We're of growth that our two the polysilicon foundation manufacturing, majority years over of in EBITDA been closed out-of-market unprofitable continuous utilized the last bolstered environment. its capacity expect joining With this to or consistent of S. week, Maxeon to over in doing reach margins a years that all all this factories. our at contract, we'll be lasting time Maxeon been, plants, months decade-plus you U. majority and tumultuous for of Maxeon. about be and in of to and during the will industry We've the we're balance appreciate to a mid-XXXX, saying target turnaround, it fully celebrating by a XX% greater. a significant future. amazing sheet XX% We within second We've successful for continues and products. to and two us set be with include revenue upgraded the two We've what years our model the birthday recently XXXX. more with it's on future an few have of ramping new financially journey. we

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

America. comes question Dumoulin-Smith the you. of Instructions] Our first [Operator Julien Bank line of from Thank with

closely if Hey, as think some as for Alex I think that the bit I effort you one for, target would are solar and timing Around you're here. people panel to availability. as these on the timing quarter any this expect as clarify these here. that you that on wanted Congrats the little well ITCs the well a for clarity expansion for could you the solar it's you headlines ask a that possible some manufacturing know lot U.S., eligible watching some manufacturing between credit Julien. obviously, as as Thanks. I on more, in might or give of guys to far or that as panel that the of unpack well as of credits there's PTCs possible as

Jeff. Thank you, is This Sure. Alex.

maybe excellent the So level, at drive reemergence the help -- first feel we to describe chain. a to resurgence U.S. position higher solar an it and we're supply just of we're in kind of the

close up supply really We And chain. first and a proven up That's We're to out through capacity of Malaysia into of S. learning are for teeth and to of process, a the next right us, U. week the established the of gigawatts on U.S. teams generation curve giving the in scale U.S. really our to speak, Mexicali. our do shipments the scale now, capability X market. as this friendly shipping we've cutting we we're expecting be also, which here dozens of the

we've feel real are tremendous got also who company demand of supply confident we a And the that. because and we with chain. So as

we have we there. think DOE for got part this administration's about next phase, application We've strong is so good application. real a feel the that we confidence goals of fits So program, this the when the

six from first that come about for production. We then expect concludes, that loan through. years guarantee to once And to the months about two

the be comes the to of credit for other So we think we're $X.XX us meet cell also early fab -- Modco fab per that is both when our expectation you the the I guess, there XX kind credit requirements through. to expectation our about When ITC would about XXXX all the content, -- piecing per adder we of $X. it for the And of it can think around producing. and domestic credits, watt. kind first, for the things watt of would that

our to We will over will expect get we the domestic finalized the to be coming help everything goal can ITC obviously, meet do details to the here But requirements months. maximize adder. and those

think term. guess, I if bit can back my And a near I to Great. just follow-on, the we of, little sort focus

far the as I reprice As year-over-year the know headwinds to think XQ, utility margin far for as quarter, particularly guide were at you of you for mentioned mentioned of sort to $XX of last that. account as level And scale you million I chain. of your trying some some supply contracts,

I the that like moving evolve the there and for how on expect efforts if today give then pieces we color are repricing, the mean, you seeing gave your year what EBITDA just into far as were us So little to that and a 'XX? the are on guide of end successful how headwinds can more as you're the what you

Okay.

then I'll contributors first some margin repricing the some I'll to of to hand provide Kai some and over of details speak the other So it efforts, on improvement. more on to

within say scale customers would with happy we've I utility business that first, that we've with taken very the U.S. been So on the our

relationships. collaborative a secure to able with have leaders been have professional of very strong built great some just handful good companies and great We up really

of to anything of be that the put through to any We're in we those say have working us. be would going that nor I'm contracts I are able some to favorable will optimistic. way a of contracts, restructure We guarantee some

to of broadly So say Kai, I'd report. progress there, do margin but want kind improvement? on on yet good more you nothing expand to

Jeff. you, Alex, Yeah, absolutely. Kai. is Thank this

improvement, the we we positive terms today. are margin DG that gross few already side Obviously, margin said of on we there. out So put business, the a in of markers the

that an fourth breakeven targeting quarter. also gross margin overall in for we We the mentioned are Maxeon

there. of So a first in to of way ground third guidance that's kind point the the is kind go quarter and really margin the marker

that there's the about expected. we think As further improvement side on improvement, DG

We -- expecting are have been increasing higher we prices.

that report next side. expecting we're So prices higher on to quarter

also, We reduced ramping of power utilize space on in as foreseeable United the X. we idle shippings more least further entry HSPV low various into And as market or of expect lower expect of have DG expect we you beyond provisions markets DG there that costs, also higher the into the the panel right at are really are volumes prices But a also we some we XXXX the not facility, currently but which because Maxeon to which overtime a would expand and States, on side, still take capacity plant we from markets, cost we U.S. expecting are now in we those business, from really, as should P-Series offerings And on the the the But and to higher overtime. bigger the we of capacity the those gain shipping are fully share strong DG starting bookings are further power as side as to tailwinds later XXXX, going then the there as the all see foothold price know. also plant on side products. DG we we last starting business. shipping well are into which And things improving future there. be for our in that

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

Markets. Instructions] question line the next Northland of Capital Donovan Schafer comes [Operator you. Thank with from Our

open. is Your line

ones those questions. Hi, features to the question renegotiating price of guys. fixed you the I power Alex's for just up. about, up follow Yeah, taking I Thanks plant modules. the kind on want follow to for contracts want just

to aware low and we of guess kind I'm just a it concern, curious of to standpoint margin have contracts. it I timelines and be just So always from -- prepared the yeah, some there's for gross

now? great that'd contracts right when So asking, had that color long where impact were off? be look extend? quite roll not helpful. would signed, if more favorable When there those they? would hypothetically contracts of persist? far guess maybe they don't the Any I renegotiated instead would that then How would way. would into as a speaking, the wrote were And How to they

in said we've very took initial past, the business. as Yeah, Donovan. were that for contracts the Thanks, we Sure. the these

have XXXX, XXXX, priced So chain expectations different been supply was a in it very for these back with 'XX. early and different when would market

those you So about are more think market then, more you cost line as in think, them reporting, getting the would then the today. since with when indexed. where I should contracts been been contracts lower -- been that that we've And done also doing ASP within pricing as that we've well, is is way we've recently, is XXXX. be And

I see had margin and less evolved we've with initial did. of you'll that much think the exposure So some beyond, than you very when XXXX, we and maybe think about contracts we

to Okay, want then there X and And ASP you what the Maxeon uplift, kind also watt, I way for premium, these an making, to part get? that's a from Maxeon X. premium technologies know, Or is what is to cents Is with I you're incremental, ask, of still of going so can great. quantify cost lowering also any important able maybe per product. the associated

maybe the would per from going just focus through just XX%, per or But sort -- just of apples-to-apples. or what X? like So Maxeon XXX%. X incremental watt get simplicity, for margin margin Maxeon improvement watt yeah, of the you this let's maybe I mix gross and is know their you're on And like, cents sort to be because can panel-to-panel, and

one what, panel? for one versus Maxeon panel X So Maxeon X

Sure.

up X just bump in technology. size. It X I wafer -- kind and way same bump Maxeon essentially up of minor is think minor to in a think about the was Maxeon

Max Really and as the though, the performance the more for X. panels overall X intimated similar. the it's Max of you really around specs So of panels versus are

Maxeon And marketplace. good And X So still that's of relative say that competitive there. you've efficiencies X even the technology Maxeon really, I'd out cost we in to couple reduction good X to is what about a X. there. also a about and think really industry-leading same X, very Maxeon saw Maxeon that. provides When we pieces Maxeon provides

to of of a of because is instance features also reduction, spot elimination much like it really going additional first to hot but cell. about not as about Maxeon of the was cost The the significant adding efficiency about be architecture that be so improvement

about six industry-leading It's say generation-to-generation really much the X. has. from been Max would around. see a with just even cost X the degradation X, to with long reductions, a more or efficiency. about the first And warranties you'll and XX-year from lower of -- three around around been two not with So cost the bump. our marketplace to it's to six it's competition stay how has I first for to us more panels -- is the instance X more when what with out it's performance seven in reductions, But

you maybe to talked something actually, Maxeon about the wondering, But, if Okay. know or if mean, you best but actually on anything, and ready Yeah, a of sort those numbers waiting timeline efficiencies you're And of do. I what us. kind Just the timeline off I guess topic, us of Day? that line is sharing just kind of maybe be have a you to that'd share And for where the the on during you're with pilot ever at could not guys on maybe that, quantify certification and know that's improvements your we are X. the coming then plan a Analyst please when are? efficiency there when with that point get you I third-party guys or great. those a

Sure.

Day, provide So into at probably the insight Analyst Maxeons. will we more

And will replica of in our reiterate production. that we that we labs, on will be us something are talk see performance, we volume verification, we record laboratory, talk things to think when efficiencies about, per comes achieving not level. will it cell day it we've being is together and our when a us What of we're of at high I'll that just about are to in of is what I cells pilot that we've something panels create in think I that and doing third-party cells volumes, the over continue thousands when expect would in can hundreds and that efficiencies you it is panel at say, seeing to which there. the see happen talked apart we're the the on lines, established really But record able that certainly those credibility production that of one that achieving, we're out is about So I it's efficiencies. efficiencies. the decades that is going type we're into putting sets our to line,

have panel we're we give can And Analyst so probably more And Maxeon sit how our that just into where a X know our example. you Day look up. much insight do that, that at coming an with that as going to will we better gets

you the and us you're can that yield targets than higher as know, if you think, pilot about speed they question, attribute half panels there? you just I'm metrics the running speed the what's you I you're line there? or at what pilot Is hit a on said hitting at a just or seeing it are? out curious you're you of the you're kind are increasing on coming having talking or production last speed, line are line. targets that tell And attribute what I call, saying faster that

efficiencies was more the producing. there Yeah. we're to What was that I referring around

panel actual with So that. performance. seeing to the performance record That’s a respect

Awesome.

the take I'll guys. offline. Okay, you, Thank rest

Sure.

Donavan. Okay, thanks,

Thank you. question Shen of next ROTH comes from [Operator the Instructions] Partners. Our Philip with Capital line

Your line open. is

for questions. Hi, my Thanks taking everyone.

is the leg next First up on capacity expansion. one of a follow

months mod then year about lines than to that? a take year maybe of year. -- to X-gigawatts could you might that Jeff, historically, six possible about bit mentioned that online think bring come wanted think, sooner and solar I I a and a little even XXXX. it module come line on would online we explore early about months could it the amount a be more, that just six When fair still be a

as it the if path. a think then very contemplating are you And now actually to relates it sooner how do clear gigawatts, could much three and there's you another so, facility, what be next So a passed there's and to guys degree is sooner? law really,

is IBC Of as domestic very not an But matters as course, either [Indiscernible] clear clear. content incentive. the

or much facility? you X-gigawatts next contemplating already, Thanks. And so larger guys are very that

Sure.

would construct we of to stated beginning though I ready we're first, early around what production. not would 'XX of say So what What commit the you cell add to to a anything I the what said earlier needing than house really makes that's that is it it a not one-year And modco. of and facility us is fab turnaround. to new part to

time. that gigawatt and If you the current doing with to house and running within in the that roughly the and were be about look in U.S. year's we at longer We'll up have, Malaysia, new what of to Mexicali facility. modco fab fits the first you those in get here. A bit that X.X were saying. We able a construction the delay little production

the be on that'll that. So I'd comment have

in certainly is think capacity, there I terms of out that's demand additional there.

than look customers, continue to not Let's a today, comes say doing already with this as capacity to out we it announce adapt for jump, where and that more our to what talked progress we'll ready stated. be if But that will at our certainly, ready take more we we've proactively sit we're and makes at with going believe sense. we we've what be beyond along building first to capacity we're to about talk

business. DG your to over Shifting Jeff. Thanks,

with You recently. CD partnership announced the

how for it standpoint? potential could from there us half volume year more could near Thanks. you on to XXXX ramp that wondering the megawatt was up? or you are do when those think for through term potential working back And distribution? this And when is much think now, you partners relates it's another volumes additionally, then distributor, then CD think about have soon. get to you if in I remind a so, as And you expect I

we would -- the beginning I of XXXX. CD, shipments in What we first are start say with Sure. is

with So the think the of biggest And CD. XXXX, to they're we shipments be I in January will in your third U.S. question CD, to

a know as you're that as I very them aware, we with we're As see partner. happy relationship, a great

great supplier We and to and them, along is really really to into be is CD with expectation a a great being be SunPower. see continuing our to do supplier focus So SunPower very that channel elements how with the our they'll complementary. continue great their for SunPower model us. sell that And premium customer be product knows unique understands panels, to of to our

that us by there's big And, date that likes very with other CD, happy XX% out the we're go chunk LG been that's of a for the Maxeon Panasonic. really to of of to So after relationship. looking market there has really panels. United served States the and the that's allows

So relationship. we're excited to start that

or In that about the forecast, of going margin less of into and from are that to U.S. is to are we're that could publicly volume re-partitioner markets something up, other supply free the variety them looking that's not at we say will could be the we terms that say we a of kind redistribute doing things of that I amount of I kind would we talking funnel about to have maybe attractive, volume what

find, many to to to trying can we we're panels capacity say as would supply So out the our of I U.S. be able as market.

to markets IBC a volume be of a are resi. great could into from more the we've of U.S. Europe a U.S. so see is maybe markets some outside little markets Now perspective, some can that But market. said, you a serve. got other expect the market, is we phenomenal margin phenomenal challenging us there Australia more the take of commercial like shift

finally Great, on liquidity. then And thanks detail. for that

really months? leg six you seems every of expect to trigger next what capital? It congrats then the to what might driven there. convert, more? be module facility would convert in for sufficient then whether so, the pay would cash you sufficient percentage potential sense as -- X.X% cell of And pay of you the or to relates you do to your would of it think X-K. What's that your it -- next of like in it? decision there's X-gigawatts, you X-gigawatt current as in raise it's and and need decision? for Thanks. some would or have maybe all half you variability like the none or the Do that the or You cash guys a liquidity And on in that's that if And expect if the that X-K, not by Or -- capacity? release, the

more ahead have. going and turn some business you we that in of Okay, is We are to of they answer million over I'll I the we're and let the happy convertible sign that business the Kai, just questions the potential to But it's say it will very able where first, do with the have. me to defer answer Kai. of that detailed But the have the with $XXX over competence TZE. that think a majority we obviously that

you, Jeff. Kai. thank Hi, it's Yeah, Phil,

Philippines So seeing and and very the and and they gives said, [ph] Sonata think as we Max terms the sheet do bolts in we us in things. the and the previously X of, X off other course among conditions to the balance it are to competitive conversion of you're Max terms ability

news to really been And a the really, positive that. you seen reaction get very for timely in on have that. that also has here that's good So market that done manner

paid other of the take regards interest. first X.X% coupon the true, with points. me to the the needs in Yes, possibilities be it's question cash to to X percentage remaining pay Let and there's

can take overall our make the up a is coupon paid us? go. made long at that said how really the that just out. I things a mind decision yet first does X.X%. is pencil We months on circumstances far -- these in is how before be as And use on we'll based haven't the guess but the does an With funding, decisions you the Max the proceeds X. payment assumption have to time, going in We make cash, but it's as payment-to-payment we to six on basis of maybe regards we'll that

you the have funding also majority would that raised. capacity. customers, from with as of come additional for than puts In arrangements the lot be the for which different have things. expecting that's kind that that course, of vast loan we we demand And more high We Will on funding it Likely we for liquidity U.S. the are expansion? of need not. know, use for enough DOE because can that what it very sheet balance that and addition, a

range addition for that, are In a of we options to always growth of investments. evaluating kind these

and at always there believe and time. of circumstances there's a are and growth that lots at we also in We opportunities, disposal right many at our company options execute growth the are given to opportunities a time, industry,

pass and on. color it Thanks Kai, I'll the for Great. Jeff.

Phil. Thanks,

you. comes next with of the from Goldman line Lee Thank question Our Sachs. [Operator Brian Instructions]

open. Your line is

I Grace follow first question. question, This the Hi, to my appreciate prepared taking the the in guess all the is thanks color questions on up on for remarks for on just margins. Q&A. the and Brian. I

the ramp-up 'XX. can Just of margin you I of kind should ramp in utility for like, the expect those negative Thanks. the from talked bridge numbers like know if I scale of about like margin like put shipments. like the scale how gross I target points from gross some and also drivers you the trying like ramp-up today's around U.S. should we what wonder then also, drivers, like just X% many to the online of margin to XX% U.S.? example, Maxeon gap like basis expect like shipments utility 'XX? And in the in

Kai, well, I hand that over to you.

Sure. And Grace. thank you,

the I part remarks XX% items with -- we haven't the is the before. of are there those that more said as margin discussion in here. mentioned those, and these described for regards are we we previous there's of quantified lots the quantifying at also And the going some of get is the of overall, plant which to target. DG to Jeff has I expecting than negative or think his there's that I of yet. course, then, we way margin, moment power gross So side have that XX% And With all dynamics side, really in them business,

items. color Analyst And more at contribution give on I to would relative development to that are Day. planning their say We the different these

But think with the bear then. out here. and we have I us dynamics until points laid main please So

plan, Understood. in the a of Performance about in besides to capacity Line, I potential think X-gigawatts I X- your Okay. U.S. think talked capacity line. for you expansion past, then the your for X-gigawatt this expansion your on IBC And of

change that your both Thanks. on is of Of you IRA, in course, and terms that capacity funding optionalities. timing how was got now But depending to going plans size?

X do add X priority what to the X. can but you say from -- color, for Maxeon Kai, and I would first, conversion Maxeon to Maxeon first our is more that Just

that, Fab improvements and product, reduce with the COGS significantly. with And product it would which X can Philippines beyond of both rearchitected think we've as So about the come adds we really additional the the will the with about capacity say, talked you end the along pretty that in would metallization any I have the capacity CapEx that Maxeon that or for X. Fab back that of

be left So that add? to more detail. expansion. want that you'd out any I will I've prepared really anything But capacity Kai, that moving unleashes really us talk to what there we're into about in think today don't

really No, to add. nothing

Okay. Thank you.

you, Thank Grace.

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

Your is open. line

Thanks for taking question. the

about lot markets. You European talked U.S. a and

with Is down The are touch your revenue of dollar demand? tiny bit a reallocating even Or slice in me volume you lack year a which of Let mix, Asia-Pacific. ago. deliberately on demand? a greater was terms only regions that to versus

of meant given in say question, that's for see, of margin first, of bit great say, IBC U.S. see And reallocation. XXXX, is mix surge I demand both. a a too, we're to that. you're to particularly would you'll that of I market, the and surge some have going we it's that But similarly said, going we I as have the more potential. say, shifting we Yeah, are European demand, the just with market, would where our demand Pavel. a reallocating the there in higher would markets our to

a that is refer factory. taking comes that world Asia-Pacific we've say out Performance it, command we what there is of get better venture element as can to about that. out is of market pursue think, China outside there over that fairly what as we that we'll to we business, joint of as following a The joint same X-gigawatt ASPs I which I we're output, the do well or been a no take-or-pay And plant out model lumpy for of China, in other piece there, year, long is now, we is that of Series have than that continue the product to the have that And can the rest China. talking though with would power venture and

at the as have we to utility Asian we've from we of revenue been had some you So most current not extent probably business that the the have or same some what refilling a scale either ago saw all would in quarter. year

it share the of now the DG making as So ends up pretty us U.S. certainly Europe then the company. lion's of being U.S. for business utility up and a right with do part scale and small what a we Australia,

is you've the something on My follow-up on venture. is briefly which joint Chinese touched

of I quarter, consistently it your $X you when it don't pretty negative. million I it's been lost think or know least negative -- to was it breakeven? guide sense this at share but it, and to of should get any

pretty in scale up. significant that say Let's is business

If ago, XXXX you date, X go back three zero effectively up to to scaled from gigawatts. even that we've to years

and scales, as the that it's but to factories, getting competitive seen we at more of not impact we investing probably business cost say, for now, factories you're on with expect economies it's is profits forecast profitability. and very profitability. And up that emphasis while when expect It Performance level it So than it for it's of the an scale an near scale. ramped hit own more for to even because scale get we've the in ramping future. our product you're that Series let's stabilizes, getting much you've put mode. to U.S. in near-term But any it does more We're it's for because And term, more on the profitability. the right as But on providing that growth it

guys. Fair Thank enough. you,

you, Pavel. Thank

of Pickering question from comes Pollard Our Instructions] next Energy [Operator line you. the Thank Kevin with Partners.

Your line open. is

you. Thank

the that be scale? quick will And on take us more guess the ultimate of transition little in when of what X give can starts occurred? capacity for pile when has exactly a X the the on the Maxeon With last scale, one what's question will -- how to it me. Just timing funded I fully color bit of -- and that Fab rate long once improvement up you

Sure. Thanks, Kevin.

first, existing year. a is in for Maxeon the X the about megawatts Philippines So capacity XXX

be we getting think what it the So you an you get. because currently going is to so bump that panel of would watts uptick Max more But that higher a above XXX so -- than efficiencies, about do. to think small are providing as you per X can

that given to planned, As said potentially for current of the are the environment, timing, than -- have, as that are in about at wafer. we turn quickly, wafer We'll timing a it doing from of X on make decisions larger time you can But an the we of to new Max we what X-inch so would come. some impact which an would the as currently 'XX think market going have capital that around we looking on around prepared but a we the frame. given kind exact 'XX, remarks, that was when investigation

wanted Okay, on Performance ask then little bit question thanks. to I And a Line U.S. longer-term the business.

forward. of you've talked So margins XX% the about plus kind DG going being

margin With initial of move right ramp and startup But of on full line costs the much pretty business the fully the now you to contracts. kind obviously USP contract? line, look like ramped negative once pricing and USP that the and with you're what's variable profile

a for still model forecasting get-go, from company. we've been -- been and margin, of financial the long-term and We've to kind targeting are the absolutely. our XX% target Yeah, committed gross

we've XX% gross it. better, think margin a can about So that's as potentially where or it but you been forecasting

for Okay. Thanks. me, guys. That's all

Thank you.

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

may disconnect. You now