Maxeon Solar Technologies (MAXN) 15 Nov 232023 Q3 Earnings call transcript

Good day, ladies and gentlemen. Welcome to Maxeon Solar Technologies' Third Quarter 2023 earnings call. [Operator Instructions].

As a reminder, this conference call is being recorded. And now I would like to turn the call over. moment. One

Officer, Good Conference welcome are Call. Bill Chief operator. Quarter Maxeon's Chief everyone, Chief Mulligan, Earnings and XXXX With Financial day, you, Peter to and Third Executive, Strategy Thank Officer, Strohbecke Aschenbrenner. Kai us today

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

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

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

third different our the businesses in two trajectories Thanks, experienced quarter. dramatically Rob. Maxeon during

of manufacturing a margin to broad a significant effects milestones provide U.S. we on with DG the implications review track to prices Europe. I'll planned the a factory. In higher to previous rest Q&A. the XX% sold-out achievement our respective for with are of backlog conclude these utility-scale respect we and important the and contributions expect to fully we market few Our at business, SunPower for we'll year up U.S. revenue spend XXXX and the material faced and year, versus detailing was exit our will in caused make facilities, and the then minutes and of ramped by shipments that Kai suspension the environments challenges performance now guidance then dislocation financial Maxeon. demand with the in market of QX our different quarter,

The focus leader key believe America to New U.S. the for Maxeon and North entering in planned is driver. our United stage. We and meaningful utility-scale to advanced the at a manufacturing reaching positioned operating primary factory profitability chain With our engineering supply our us be is in reshore growth improved efficiency that existing solar design market and utility-scale States Mexico a in cell scale. helping panel milestones

Department capacity finance future work the intensively Albuquerque. capacity loan secured for to office for X.X megawatts Towards our U.S. hired adjacent cite of and program and represents compared that We manager We've are original gigawatt with of this increase a general a we on to working factory solar expansion. This XXX parcels an in cell preconstruction end, well the Energy's options with underway. design. facility allow panel

year existing ramp be up In Albuquerque. to factory the to pilot running anticipated line U.S. well in accelerate ramp plan install our this of derisk Fab order expect a in we of in ahead and and factory, line to TOPCon Malaysia our and the next X

U.S. transfer valuable to serve development our for will expect this factory. [indiscernible] technology a and We as pilot training line platform process provide experience

the of scale at shipments States. XXXX. XXX% Pricing shipped of the increase our run advancing during shipments X.X first volume year, Finally, the and in over we multiple booked to for well an utility to were business negotiations rate are in orders execute of gigawatts DOE offtake agreements, which XXXX pricing we in this United to prior to plan we loan. QX closing the into as for from expect transition of we with half increased further the annual

from pricing inputs. onwards ASPs structures as transition XXXX certain may to cost to index we tied Note fluctuate that

delivery now XXXX plus stands X.X XXXX. backlog an each in supply megawatts Contracted at of gigawatts XXX of through for XXXX, allocated XXXX, additional and

contractual now Europe, Let's deteriorated to modules purchase this June our and to of the conditions turn SunPower commodity Since oversupply attention DG falling have Chinese in year, an due of of short business. rapidly their obligations.

global industry integration penetration. The to sector renewable high and the to well environment. unprecedented, to DG None associated combination, a very but currently as policy the smart rates, grid supply to the the regarding importance continued be a challenging This potential of and storage challenges interest excess sector is supported create this with long produced bullish mid- what and retail increasing inventory. these of as continue we avoidance headwinds of experiencing congestion is have energy in prices, battery However, electric systems is in by as barrier term. are view or of unique they disruptions dispatchable

will increasing control in best manufacturing We panel hardware usage. enables and that their however, software be on our selling a focused to remain part differentiated long energy attachment DG homeowners panels of a direct-to-installer of strategy, the beyond world's sales through DG the and with vital solar continue We developing, channel the run. the sector confident, the are mainly that to solar industry

a constraints previously contract of have recent shipments. The and that July megawatts obligations by settlement contracted Maxeon megawatts reached the quarter, other panels us on through February performance end to dispute this hampered resolved As sales claims to XX prices the for parties at to that SunPower QX. to a many obligations this on us we product I'm SunPower in XXXX transact has settlement pleased IBC installers. led the severely agreed to the also by calls week end beyond from announce financial contractual end with The parties resume enables of by including shipments with you of been and supply and outstanding to suspend of through SunPower have earlier XX breaches. purchase SunPower DG know, to our that

and has installers world's the America the former accelerated eliminate pricing. President historically to General panels and to us SunPower marketing enable products, our our markup allowing transaction will ramp to deliver directly recent U.S. market. This years. He our competitive Desai, more acquisition, Leveraging business which now of Maxeon. product our North sales best rate key our who will Solaria the on run number in original to panels in $X success over Offering was Vikas at to the plans including at the that here sales the customers development X successfully addition talent, nearly to our installer to with aggressively actively Solaria the Solaria Manager. is our just buying of dealers over of architect the of XXX. The also billion doubled Vikas be infrastructure channel channel focused will grew that SunPower's replicating of added

While mid-XXXX. a the shipments in year-over-year U.S. key panels sizable of demand the being variable, we half year, X time currently expect of new California will we decline with the residential we expect first in in next recover by the starting Maxeon begin our demand market that

Europe. to Turning

industry-wide installers, positive gross elevated ASPs reduced markets, primarily Our due successfully Maxeon shipments has volume. albeit to to most maintain allowed were margins, with sells which down and inventories. to key module directly sequentially XX% In us European healthy

is in product France, have excellent our battery and reserve SunPower Australia, and Spain Italy, ease Belgium, customer regarding widely and received now available product dealers of installation. to feedback we quality Our

we Italy's segment, into supplier As and as commercial projects sales for our well we are pipeline pleased win last similar early airport module an Torino in focus call, our and as the as mentioned growing in of industrial we a to announce region. increased high-profile the a

technology. say IBC solar about panel a Let me words now our few

in panels U.S. step they a volume decrease expected to the critical to a than focus SunPower and capacity. future our X we earlier Fab the second-generation DG to forward to full Maxeon and offtake, planned, on technology Maxeon to the Our now discontinuation have X were X business, been market Maxeon our generation phase big X will the decision U.S. previously reserve With we near-term future X sixth have bring the of quarter to with contributor plan for were DG Maxeon out and due in generations. We placed made a compared products particularly

a and previously. the plan markets premanufacture will volume transition product up Maxeon space to to all key TOPCon sufficient X mentioned ensure to install in to smooth utilize freed line X Maxeon We I our the X of in Fab pilot

the solar We have of to homeowners IBC era efficiency more which first X IBC our seventh platform the from June, roof the by to the performance and is crowned thereby back technology extend delivers panel XX% and as maximizing power adoption. Since increased most our our world's exceeding in even currently continued with offset spin. bill NREL Maxeon technology of developed limited vehicle Maxeon early-stage our efficient excited their will attributes that efficiency. leadership efficiently X production half and since commercialized are other module runs output Maxeon nearly very allow space, in improve, generate electric about generation

people, just degradation simultaneously performance and architecture levels achieved with record we'd controlling our solar as However, efficiency. while technologies, hotspots for which these in high-performance competitors' it's like and issues to observed challenges are other not common products. regularity that remind we about X Maxeon

selling from with Maxeon next peak the expect corresponds market. panels We to season start X shipping residential in summer U.S. which the

words few a intellectual adding With taking in we and another about IBC forward are IP considerable we Maxeon say are field. architecture, moat with to property. want I our to major respect Finally, X, step this to

to over fundamental is architectures. in panel formidable cell to patent to related X,XXX aggressively. In track Tongwei enabling are Solar on several increasingly panel elements we utility-scale related difficult patent filed to Mexico. applications to over and to close as prepare IBC New the We technology. Yesterday, With they next European action across around cell pending developed plan capacity As Earlier increment major year, distributors [indiscernible] IP a competitors we shingled business this solar and our addressing we IP decades. defend for infringement granted has portfolio summary, portfolio attempt Maxeon our cell performance our we U.S. it several patent countries, IP deploy gap distributors creating architecture. patents sent deliver our action our and XX solar filed infringement last to finding a letters a European to margins have to products, XXX navigate to increasing against the that the and our against continue high-performance Aiko our

with the and Maxeon recover many X back the DG technology Although half is were to margins speed positioned and Kai. the of we surprised in changes others to this well over year, the our introduced. With and our as turn it expect in that, XXXX and industry by are we magnitude initiatives of channel DG I'll

of utility-scale details majority shipments were provide quarter's and shipments you, drivers in Maxeon's the for full third first performance the and for last for year. then the customers. of Thank And went the will to megawatts. history, Total I Bill. discuss the guidance time quarter XXX

We shipments our which for Also, market the impacted expect time due revenues sequential normal buildup. Shipments XX% declined supply-demand attributable XX% SunPower, a to for in by the United this quarter year-on-year. history, Europe, DG our guidance in basis, were a to the Revenues to shipments highest the with the resulted be went future, $XXX consistent mix foreseeable our also European updated included customers increase a entirely geographies. to significant than decline XX% though share range continued in a volumes Maxeon of and utility-scale in dispute lower our with to higher due blended sizable the ASP States. Total the largely in ASPs volumes. On DG to first sales. more with in million imbalance also for which sequentially down U.S. a utility-scale new were were third inventory industry-wide caused sequentially, and

the dispute X sequential revenues. $X.XX in expenses offset in Our $XX global operating purchase was GAAP expansion in and profit significant our third SunPower cancellation limited sequentially Fab market for Philippines. by of charges per million sequentially conditions, was of for $XX X% flat the US or of quarter write-downs. only reductions. Gross the planned by in X Europe, primarily in SunPower, and with our DG shipments quarter. inventory in early driven largely was million, performance of were partially orders decline cost series DG the $X to and included DG of above This at with the ASPs oversupply at ASP the the XX% capacity watt connection restructuring Maxeon million previously were down

to [ accelerate Maxeon X. result of As for in is expanding decision convert $XXX charges, at in October, Fab these announced allows to early instead X and of Maxeon the savings capacities our introduction cancellation to our us of Fab X to ] existing after net X expected approximately X manufacturing accounting million CapEx Maxeon

forward. of Non-GAAP operating sequential negative attributable $XX $XX in quarter from the charges Net plus loss context or with million in was the fourth million $X million stockholders decline consistent our by $XXX primarily loss came put was that million, profit remeasurement expenses previous million, in measures The any quarter force, million with in quarter to decline the our the gross driven in million October third our pre-announcement. EBITDA on $XX we prepaid impact quarter. to place. were attributable at range I the to will third The to below in discuss X $XX in million lower guidance of and which compared combined our $XX does restructuring include our due austerity minus announced the reduction not in outlook. Adjusted

reduction to equivalents, due $XXX part debt. also quarter, balance million closed compared our a margin $XXX and increased third levels the expenses cash the utility-scale short-term SunPower. Cash inventory and quarter. during million shipments in at impacted lower the Total from the of sequentially restricted capital restructuring to sheet. to $XXX cash, the million dollars global business DG reduction end to quarter levels from on to by shipments expenditures short-term related of second million $XXX to in investment our cash We U.S. contract with were Moving and liabilities suspended business, of the

the for plan with expenditures as came introduction guidance million end took of associated X. the range $XX execute below to quarter low the actions at our third of in lower Capital Maxeon we CapEx the

time, into for our utility-scale more in uncertainties and unfolding continue. Europe favorably. By in in dynamics and Going shipments businesses contractually we United the fourth have industry distributed that are same due business elsewhere. and been costs DG to and been generation are to the ASPs the have manufacturing utility-scale locked quarter, over and the that States increasing comparison, tracking outlook Volume expect has the largely business headwinds our

while to Given the action manufacturing of have over liquidity months, few velocity quickly a safeguard developed we our our ability short healthy of capacity those maintaining pivot to to have course and a headwinds strict taken measures the ensure that decisive invest been project priority only organization, management capital as in United the our preparations as and we our in redoubling and a X priorities. Most States. in high notably for finance our for are into Cash Maxeon well the working manufacturing this Maxeon's have always efforts area. austerity

manufacturing We material orders inventory modulating our with volumes rightsizing line on related raw existing have IBC and and manufacturing footprint in resources. reduced hand our while and are orders

the we As expect as we year. inventory a reduced exit levels significantly result,

ramp. by plan many also of with mentioned, negotiated have payment reduced And Maxeon We of our terms CapEx our more suppliers. as is substantially our favorable pivot X the

growth On of the sales DG side, initiatives. set a we are narrow focusing on

certain well or $XXX in the to be our are IBC in These to $X gross write-down be includes utility-scale of million, as quarter severance of manufacturing expected charges $X costs purchase charges of assets Maxeon totaling the as as $XX our canceled the slight as Incremental projected the a turn restructuring in is previously shipments X number and I'll while phase fourth $XXX the of write-downs, XXX or growth of the the approximately beyond higher of delivery continued pivot, next expected only relatively flat decline implications to pricing in mid to but would expect beginning million X $XX Non-GAAP expenses that guidance United our as due Has megawatts. in C&I, revenue, the and guidance shipments offset volume, agreement. project the and mainly quarter residential. We sequentially sequential commercial in project the to scaling DG third, introduction in a of Maxeon for as to announced include in Europe million. at Solaria expected $X plus on the penetration affected, our originally accelerated the related million. of in expenses year. With million revenues related U.S. certain X resulting of of context costs acquisition; be impact inventory $XXX fourth SunPower. we U.S. net to in orders and from IBC Solaria $XX and for further further sequential other the risk our a of expansion growth idle full be United be States. Non-GAAP the but million than positive combined. GAAP our ASP XXX industrial operational reduction midpoint, lower sales and liquidated XX% million. with SunPower includes Also, plus quarter with First, range up for capacity to the now market minus in by fourth agreed under depreciation workforce between operating includes loss X mind, and contractually settlement our approximately mid-point global of year our this to is operating which of fourth well having to well decision to quarter to We increase and minus adding carry expected States; Europe of offerings; utility-scale the acquisition Maxeon shipments $XX potential This market Maxeon as expenses previous be to start our million, guidance. approximately on realignment Maxeon million out will and for to force. We the this its excess entirely panel leveraging damages million XX%. residential branded second, finally, channel that segment of because now our delays are

austerity majority measures. marketing have OpEx. in sales our force versus the head increase and a therefore, by initiated impact the will reduction on during of that impacts operations, offset Note an vast the quarter, U.S. in count manufacturing and As is costs disproportionate

the and expected expenditures a X projected attributable levels. Fourth quarter are and $XX to million, million. quarter on planned our lower spending the is capital The for site. sequential to expected is of to in non-GAAP between largely growth Albuquerque income in EBITDA for fourth preparatory OpEx range be to is Adjusted which decline $XX $XX ramps majority Maxeon million of negative be million our $XX unchanged initially

may majority be the months build we sheet, secure While in and from facility to is capital needed of this co-investments. initial the the balance our facility CapEx for bridged by the will that DOE U.S. the ahead expectation the customer

As implied results to our our guidance, $X.XXX XXXX billion. and XQ XQ update guidance we to $X.XXX by revenue billion

$XX Our to adjusted to million and million. EBITDA to our to guidance guidance annual $XX CapEx million million, $X $XX

Bill I'll With to summarize go it back we Q&A. to that, turn to before

channel capacity, his reduction and the continues should Thanks, rightsizing cost but professionalism response. Acceleration our improvements. settling of yield necessary displayed demand Maxeon's back DG on a pleased half get cash I'm operations growth grind quarter Kai. headcount increased a was expansion our out our painful decision response the laser-focused our dispute, track Maxeon year. Kai Reducing speed by of our next team on team the and by and by are second IBC leadership in initiatives of to this related DG to suddenly profile. SunPower and management X, and

cell we We profitability factory. and We Albuquerque will work our these within deploying expect your get to support. success and on module as back XXXX, appreciate adjusted us fronts toward EBITDA

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

Instructions]. [Operator

of the with line Bank comes America. of Dumoulin-Smith question first Julien Our from

actually which ] Julien. manufacturing Obviously, versus to think, first of like Maybe in sounds what Gravel lot the of your I continue on items if the adjustments, footprint kind I what's I a previously. loss, alluded it guys And onetime losses made like It's have you mean, XXXX. a may, will [ you was for to causing some half. it EBITDA adjusted might look gross Alex into

track is wondering TOPCon the putting you there. us what's with revenue guys as far get all to example, this expect of can I'm contributions? if when adjusted as are of able And like the for with back kind pieces? EBITDA How just you you X line, on these kind lens from of Maxeon XXXX be an moving in out that down to do phase big look help cadence

Yes. the question. Alex. thanks Bill Mulligan. for Yes,

new first demand Maxeon downturn X previously to strong what's than I has cost-effective quickly like pivot given had much manner think technology. we of had it's aggressively. this the very the downturn in us planned. year. do next-generation -- to always I a lining opportunity going we're of what to half in important silver to an so this respond incredibly And to And think industry more this our we an

year for is fairly Our outlook Europe sober. for next

capacity we forward. So looking to what we as structure to down more decided bring a the view balanced

line, inventory doing would SunPower a reduced this of actions keeping inventory absent quarter. in job good we're actually dislocation, All of these together, the our we have

ahead get next of it. We're to should we next the by of be second think take half to we're the recover. in little in So this. profitability. half It's time But of a going front out year, a to trying returning to I of --

I would the because -- number SunPower but because kind end of I Yes. would seen as DG inventories at Kai, high some and we SunPower was the mentioned, of markets, really for is Alex. add mostly Bill other record this a that, of for also the inventories, shipments. buildup the third mostly of you've maybe quarter here maybe suspended

come have ship frankly, we've going frame. Now inventory SunPower, all XX as them February seen, in a And that we're with we to speak. as to megawatts through time you settlement is stuff

a to cash from into much is not and come to also cash standpoint, there's capital out need into we working turn So that going more put all cash.

to. alluded are kind the where that of around. we of of the part in machine out that And turning X that's terms Max phase So we

right about at are We half now. running capacity

using from Maxeon the bridge inventory X that year. Maxeon next the of then and are X to remaining think have putting into mid going we're those to transition materials, to up the inventory enough We

Got it. just And maybe a follow-up.

mean one think, mid-'XX, at going product the your sort talked unveiling is of Max that I'll Solaria sort which As market. to forward. been sales market about sort exposures in looking of into sort as you of about into What -- opportunity, your versus On think that what strategy associated the I when breakage way be guys Obviously, I X already you are frame about with it. how of to SunPower, forward? the of what's you Greentech brand has past kind like it relative channel, channel the you of guys existed. bringing seems But will has what have going your the thinking the

Well, Yes. product. Yes, are the there's United market. want a folks that really still the absolutely know products of that large best panel IBC and on in States thanks. take helps And that our believe And next Max level. and X just a the base to that that

out And product demand there. so this there's latent for

transition I us think own control destiny. our this SunPower to allows from

mentioned team having and plus is of we our Desai us. Solaria in own It's the really big the jump-starting Vikas As our here. prepared build-out a for remarks, channel

strong appreciates that rebuilt So to product and product a bringing market product knows a historically we're a very and really optimistic this great with in about team ASPs. this has that,

feel by about It's while half next it. And rebuild. stronger be but I said, in we should to So good much little of positions. take a the we back -- year, like going to

Awesome.

Just may. I if a clarification, quick

there the Otherwise, we'll SunPower can you of us? commentary rest sort the on any offline. is Just give megawatts, cadence take

this fourth current I the is February. the through is think quarter. be of out the in majority, XX, we run going going say disclosed to XX, would The to have I majority

line Company. question and the Sachs next from with Goldman of Lee comes Brian Our

I SunPower to start understand resolution of here. several. kind of dispute I off, wanted to just the the Maybe had evolution

don't them hear got commitments allowing 'XX for I terminate the at guess you don't So then under the contracts 'XX. But -- megawatts to they exchange it that But I the going like sounds XX what think prior of got I both and volume you're are 'XX effectively, had committed, 'XX original for and effectively, fixed you letting they volume are pricing they're deal, you away. them getting at 'XX contracts fulfilling terms. in really and least guys of out because

move I is heading -- next a better just wanted you was guess there -- bit I strategically, into understand the struggling a it a I to you one gives -- and way I'm So behind But feels forward, I'm like know this anything of years. clarity resolution? this to how can and one-sided this you dispute few missing just you

Thanks, Yes. include us. settlement Brian. Well, the Yes. does for warrants

though, part stacked I of be there's out not for margins. a directly the challenged for the installers. cutting SunPower a primary that's able with this, the us back that So to middle of for like upside lot room to to just reason really in to, was us. man come go these market Really out

able our installers So has higher we're SunPower to going eliminating that to and offer be pricing markup better historically the to ourselves also by achieve ASPs applied products.

really able this is is to out view our be that diversify we to wanted So get of exclusive relationship, our base. customer

do And so. move. So was the we to time really strategic right this a it was felt

you That like to will. time, to take it's little this cut higher of as a bit I ASPs, as Presumably well. follow-up is ASPs, you assume to higher sounds margins a good right, would get in recover, middleman a it that, I higher term, But the medium going means that you guess Bill, transition makes sense. mentioned, Okay. as for to the for out. going if you, you're

we the in you impacted So kind mid- it high significantly teens see do when gross underutilization interim, does a by in to we consolidated the get pretty first negatively margins margins like relative of are to on back think IBC to be sound performance. When going doing year this seeing point margins. to of IBC versus probably were on higher performance you half were you're like where

us becoming term, control of just our Just We're which is We destiny for right? positioned increasingly long the for absolutely best taking U.S. well product. about this in world's market, we're the Yes. with haul. think long the excited important the to

there. the we so there's through action dramatic we're and that of quickly. a work that can dealing capacity because It's reason right we the bit here time You're underutilized that we're rightsizing our pretty problem right? So now taking on between with little want a don't capacity,

between there capacity possible. we've And sort extent right growth to cash the profitability so positive flow I for and of term near the maintaining and think the balance in struck

strong coming in second out next of half So that we're the year.

Yes. year, it, going the if add Performance And that portfolio second think we're X. about Series the Europe, half you about we're to DG of going In introduce I would for markets. a talking completely next revamped to product have

the we're production very product to So Maxeon our of team sales about. really excited on of incarnation on latest which is IBC also, X XXX% technology. the And the latest have that going

back And new moves to these all these profiles the that the we're enjoyed us bring in to of in importing have suite Solaria past. to the Maxeon States. are then are we also we'll into United going deploy products So also designed and the X, have we States, margin United that

addition ramping In that, suite complementary offerings full products of owners. home beyond the to have for a up DG panel we to really are

think transition in So of we that's to out that's going the the in full our a swing the then half first strategy, second and after and year. coming play to successfully half next

for I'll Okay. Last Great. That's on. it me and pass helpful. one

ahead to potentially if see you thinking -- right source? what expect potentially of prepared as that of having? it during a be to of I on what you little Or New bit co-investments you then of as fruition? discussions kind cash come about facility. Can Mexico it time-wise, a think, And customer some remarks, we being those we What sort is to alluded construction? relates could you in the the you you mentioned magnitude that? What your are to elaborate should look Kai, sort maybe

new and volumes, and and on. We're and as the two that DOE it But have customer together, pricing, come both now U.S. you have we've I about about not these timing, co-investments that track. the of terms position of to these conditions the two are loan say and so we where them excited pillars pillars on very, pretty financing the and disclose in co-investments. Brian, It's details. think things touch manufacturing items are these suffice would things DOE as the a talked mentioned that of that the right very main that Yes. consistently to customer with all of something, our discussing which main financing been side, facility, in are and Customers we the loan around actually just

next by question. Please our stand for

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

ask and gears Europe. shift me Let about

changes all will all Europe half a that 'XX? of 'XX your potentially is sales half more than half be in SunPower, than to even or more lot it first fair Given of the of surrounding say

the No. our in the right huge keep shipments. And us part is the major I mind, of market. segment for other mean, U.S. now, that's utility-scale becoming

going to very next into moving that's and margins year. So now right double-digit gross and -- nicely be growing

solution is sort expand flattish a be we though is for year very for hope primary share year. We that is that in segments various software. to with always charging and software still Europe or going in segments important. premium storage of next complete We of market play So integrated that panels and panel market. beyond and growth control to and this And now the our introducing expect the and EV us.

So we getting exciting traction. is and product that some think

be right somewhat So we overall, lot now, channel. I very It's is in given have think the what to -- outlook inventory the in -- European of conservative the there. inventory a on but of the there's levels channel high

-- to to US I bigger is quickly, to important. where point to the But be U.S. to be going it's strongest even recover be very the So market. or is very continues size we'll than comparable it Europe in DG And our going Europe. continue think

and the be, new started. installation boom? the the build China? where market of actually 'XX by probably What's in latest domestic the year from How is estimates only will market China since the on benefiting JV have indeed, largest increased far, it the

Yes.

JV offtake are the for JV domestic markets. We partners international use or consumption. own in exclusively Our driving primarily our their

don't much the on just homes these based let's too say, panels not now. for that's enough all just to right Chinese worldwide competitive, It's extremely out domestic So market. comment on there. massive want production There's the of really I amount capacity

a us, TOPCon off panel able panel performance that's residential because based take really format we're just generation a For been us That's been We're successful JV seventh state-of-the-art. that line product great the for our Europe. a has panel. in very to has introducing

We expect that strong competitiveness really Europe. in have to

for So Europe. our growth that's major one going be to products of

So venture regard. joint we're that in benefiting the from

majority does very scale cost the volume attractive the from us helps that our standpoint market. offtake. have we from for structure joint into and goes right, which Chinese the a You're the they foreign the benefit of That domestic venture

Module here. decline magnitude the the since be which deepest out down this look zooming to would XX% side, last demand the a when of the months, crisis. suggest global deliberately have evidence question, of drop price XXX X Econ to pricing, stimulate suggest at Last over we case? benchmarks whether Do financial sort is we to starting is on bounce the

yet. pricing kind segment that talking in a been of not fraction the possibility. to total that is mind cost the the payback installed of I in prices against higher both end There have rates are few would Keep say in -- And a in in terms periods. have -- particularly the folks is lower Pavel, use about Peter. interest the and working module this of U.S., DG homeowner. module Europe

we're haven't I'd So yet. seeing I don't that seen -- say believe we that

PPA cycle the utility-scale time. of lag, cycle times course, a side, On due there's project and to

So first. Point business I yet. maybe higher is term. here U.S., in Long [ of In effects module of think near a seeing on we'll we're the interest see that a being winded lower no, to in the market spot not the Power World counterbalance rates the Rest the also costs potentially ]

I think.

line question Our next with from MKM. comes of Philip the Shen ROTH

margins. on is one First

I recover you but commentary So half providing back guidance not you until don't that you're 'XX, make for did a expect margins, know XXXX.

and X? back quantify to be way in wondering might if to any margins then QX recovery Should levels to the in expect able QX half be in stronger performance and look was X, in modest similar we like might a it of I and you 'XX. So current or what

Philip, this Kai. is

is, We guidance progress we've to X, said, which and have question. the not going to For half, yet. new second the Yes, on also we giving of generation on introductions in of U.S. Series, EBITDA -- we're seventh hinted the you our as utility-scale. margin further Maxeon Performance the recovery that we're based -- course,

into where these had we get efficiency double remarks potentially should our think improvement we said that margins prepared we in something ASP I up expect digits. there, increases, further the which and reductions cost

some to X fourth the of of items quarter year of fourth and how first from going little the you guidance. Maxeon things would that Maxeon course. Working develop a prepared are margins half still X I that's some terms there, say to quarter thing, of through that nonrecurring the remarks and in in my affect bit going inventory course, are the to the going and also listing was positive inventories, have seen in of in a probably second a half. I So of tail in be

We and those on expect are we to be still some nonrecurring, working of those.

out, expect So footprint, to overall reengineer manufacturing with these better then that get into XXXX And go we going things take we also rightsize our are things. costs better as spring.

Okay.

if let's side, the flip pricing, about On again, talk can. we

you're going number your destiny, own to of times. you earlier, controlling Bill, obviously, as be You're, a mentioned

happens March. with can you're to And heading different that in into agreements secure so I imagine try on And deals working to players. March,

QX locking you suggest then how in And in you the for not how close was clear premature some if conversations a next it Is a modules wondering be may channel feel so I bit our until down and little could checks are year. get going resi those now? share of after U.S. pricing? And might of volume to

kind are the pricing What you module SunPower benchmark. guys you what dramatically you do, But guys trying has in summer. efficiency can with secure are think relationship guys as high of down post a Well, benchmark. of come already pricing other volume, in kind and since the lower your $X.XX for to pricing do plus you guys range to 'XX? as maybe volume So maybe think $X.XX $X.XX, modeling $X.XX a about for level that is, volume. Are for with we we higher you see I pricing that going IBC of their to don't your but know, ASPs need typically

Right. Yes. Phil. Thanks,

actually to I that dealers first -- of clarify January think approach we're SunPower free starting want I to X. just all,

number exclusivity place. Maxeon remains product a be on going. We've the sell that's a very weeks that early It the to for through to X dealers, dealers weeks the dealers, just through in SunPower number of the or year. X holiday X are approach dealers the have obviously of see QX, those of X We so, end starting are but not to of Maxeon but the a first the contract to weeks. and the is of careful away still is And little how able we We're the not all Maxeon X year. the while end been of case of

premium that regards in ASPs We in here quite and healthy January point running time. With actually is going choice ASPs, just We always ASPs So quickly chase we're to segment. fool's feel the had X to product. We've premium at race of be to a in to quickly, very we'll to bottom. to the bottom. a not a made engage still sort the it's Europe. We errand play like

very SunPower our little you headroom. story. is to we've higher feel Europe, right. the back. for States. Pricing be doing product a lower though out tell lower actually excited what together got current going was our I'm And how world. that with I to it in been what to to be volume is get the to in being maintain think is sure, again, it's But very sell higher. the numbers headroom substantially again, even the it And out substantially throwing than fairly we our the take we're has effective, well good got it these be and that to Europe eliminating we've higher prefer in for XXXX access about best puts than if with we you premium from competitive in So to really going directly. of We again, dealers story. than pricing. super in to panels to that. pricing. markup done it that the it's U.S. a bit still It's And there do We've We've architect today But situation. And and just the Desai He Vikas were XXXX. the sure. think story. in I on there worked this. able panels being and got tell to market to the Vikas got knows able of the have He lot We

Great.

cost bit SunPower work? the of is? on. color Can sharing And might then little your think, here, X-K, over, was and In it and shifting those components might gave provide on I be detail of that? on split some quantify and companies? And the pass there in Can some and maybe that what you bond detail more a $XX SunPower on some more mechanics it you components. between that what couple might defective of of million put you that what guys you defective be A how I'll And the some mention little security on release, bit the the up. then two provide split Okay. or SunPower between payment a

Sure. Sure.

to long-standing the issue a is is issue warranty time a you're warranty spin. that alluding the issue back that goes So to of the

I beneficial think parties to behind certainly it's for us. that both get dispute

as I simple think as that. it's So

bond, payment the some color on that. could maybe, On you Kai, give

basically security. a it's payment just Phil, So

that I think Of into course, both of dispute this paid not time have we get has SunPower we beginning again. such experienced a parties that an where don't situation have now settled interest us a the at very we have

we So collect and our this sure the bond that's just payment making deliveries for because security the to money. payment there are terms secure is there that

comes of Capital Schafer line Donovan question from Markets. the next with Our Northland

a within -- is dollar or the investing would request to city $X.X $X.X I cited But city want whatever dollar for the that billion is. billion And idea amount about the property article, a reporting, revenue bond is the tax that council's or was the abatement. really the itself, estimated it the Journal, Albuquerque or to bond. that first article in this according made you magnitude reference that, the the an -- this to per a about council to says be ask is amount it's So limits the request jurisdiction you revenue city filings

it costs subset would to tied to in of -- point be gigawatt of sort expected billion, initial cost? touch And are $X.X the that does -- X stray, capacity is anything they where Or is, need point there useful meaningfully -- terms question us. they would something the as that is gigawatt? the something a only allowed also, a that that's or utility certain that, X.X that include lead know whether you or -- is if a there or a you in -- there's estimate that it's of the is it can So to a is like about do misleading that us reference to

consistently. Donovan, this we've not not anywhere invest is That's as to planning useful a point. that said We're Peter. pretty close to amount reference of money,

other was the project. thing prepared we've gigawatt today for our settled in remarks The said that we've the X.X capacity on

-- That's Okay. you thank for clarifying.

just the outcomes for fourth line, expected for fronts both just guarantee than the on the both timing interplay on time better the is DOE coincidence is your or before vice versa? updates the a offtake -- imply agreements, guarantee could and saying on quarter the maybe -- loan is call. were an the this target For you of the Does in agreements so Or in loan it in or release to gave DOE guys the optic have a between these case? mean the updates DOE lesser that need

latter, loan is this of would effective The DOE again. the Donovan, agreements timing the and of co-investment of contemporaneous. closure of the Peter the be customer the going

we X. Maxeon is last talked my question then And Okay. about

it's just in You also about improvements. efficiency, degradation attributes positive but talked not there's the are hot spots,

Maxeon Maxeon X you maybe the you, see do think, on So do you I X. say, extending too but -- to anticipate or yourself soon to it's warranty that offer XX-year now

has years question, less you potentially warranty it do maybe response any end guys the -- such that that? being since long with beyond way to out would providing Phil's a warranties be and up, came that than split can related to decades. of if new talk a go for in to having if that you in until it's warranty And goes that dispute, SunPower Could a the between SunPower the it or XX warranty up

we're The warranty at. But XX-year warranty. happy we I Yes. at length moment, would always say, the the look with is pretty something

demand We of for haven't more that. than customer a seen lot anything

of we yes, There like of big are time. products But kind can as what our Technology moisture more warranty. that. attribute, we're things a changes always that be the is our hotspots competitors right? Many reliability I there. an any in degradation things higher we and and with have compound at do look We very reserving fundamentally may This pursuing. degradation. we for HJT see It's have warranty think products. I competitive competitors' of problems some that's to of sensitive unstable see over like don't

of We all have a different with products. field these lot experience

It's really of again, world's the So important. we're not panel, we the about that -- attributes just efficiency. and best always make are

warranty holds, lot the it do. the We market So extend that of we who do But that. we juice a is to talk of there's the needs. and in equation. piece what and But the particular think sell don't that's knows we'll future one about we what what

is this Donovan, Peter.

do to Just warranty itself. your last about the dispute. solar with had question the panel nothing That

comes next the UBS. from of William question Grippin with Our line

maybe Great. terms was and lost Good backfill the to My in needed premium customer this position out getting costs market. about just of you you ramping DG you kind with in of on and question speak hold be for your that kind modules demand? first that SunPower base Could investments of address talked you're thinking might that what do here. to earlier telling you or call the the there all in your story the and

amount area we make like Yes. huge where not it is to additional investment. have Will, yes, a light trying touch to we're an we do with approach. This feel a of

model of of Europe. this The experience plan developing in here that of company and people today we this working the have And replicate kind a model operating have basic a a in the lot channel. to have lot at again, that in U.S. We back is

do goal. So our that's it we and know how efficiently, to

at gross The to if a would thing It's single-digit it's I I OpEx. sales -- margin look think -- only say, organization fair you channel is is cost running that our historical of percentages. Will, say our

a as our to staff a thing So expensive of do, are two, number on largely tremendously now, one. Number we Solaria have result these that already it's not people acquisition.

some incremental in marketing But So to do we're I spend, think there we the do expenses. what there's in terms of part, to need for XXXX. most

Got it. I that. appreciate

here. one last Just

with capacity talking you're now And replacing about changes, Maxeon talked about production X. running the pre-announcement Maxeon the down X in Maxeon X. On you

in cadence understand be transition there timing production the just gap going as DG of shift? these you here, So a a result to is to trying of module and really as changes. your the Just

X some at us to a bridge going can't to again, Yes. like down we make remarks, demand is with mentioned opportunistic to manufacture this through obviously making transition. because this Well, as And time prebuild do an continue a and are you technology the in transition you're to we transition. the XXX%, change Maxeon a given while

our then to bridging strategy. going we're up, inventory, a So some prebuild and rapid fairly ramp manage transition that's back

I in of And further SunPower that from expected add shipments to also to with just and go we inventories prebuilding down into still to DG here spite expect inventory, shipments want the channels. in,

an are of than way we kind sell continue to modulating are for we more in making we a it being closer in So order that time the to get equilibrium. to

follow-up. my anticipated perfectly You

Our Andrew with Percoco of next Stanley. question the comes line from Morgan

about moving as But obviously, it. I'll maybe year, this ask year. liquidity we How flow? next what need think this early go you to thresholds are additional next maintain pressure any could the And about consider to raise you're a to margin so metrics balance hoping you're into continue is sheet follow-up, thinking cadence highlighting of that free as you And Are through capital? cash period? the there point transition would into you

Andrew. you, Thank Yes.

course, things a with of lot we that do have think I has, been discussing. the to it So

developed negative flow imbalance our growing manufacturing quarter, to changes then course, in in reflected You've the capital. sales cash that this seen with working third do of operations a which had during lot that's, between the and the in has quarter, and

decisive of that. and have these the order on, the especially capacities taken in capital We to address, footprint manufacturing on modulating and the all side, side our on actions so working

that that levels have remarks, think cash good business. about cash we during all current the existing that with talked in maintain we we and So in cash we a to for prepared position balance our the and are generate and that these measures sufficient call sufficient the

today's concludes I'm call. conference Thank further and your queue. participation. Ladies for This you the questions showing gentlemen, no in

disconnect. now may You