-- Second Quarter Revenue of $184 Million--
-- TZE makes $100
million equity investment in Maxeon to become controlling
shareholder--
SINGAPORE, Sept. 3,
2024 /PRNewswire/ -- Maxeon Solar Technologies,
Ltd. (NASDAQ: MAXN) ("Maxeon" or "the Company"), a global leader in
solar innovation and channels, today announced its financial
results for the second quarter ended June
30, 2024.
In a letter addressed to the Company's shareholders, Maxeon's
Chief Executive Officer Bill
Mulligan noted as follows:
Maxeon's financial performance was largely consistent with our
guidance for the second quarter, but the Company continues to face
significant market headwinds and uncertainties due to intense
competitive pressures, subdued distributed generation (DG) market
demand, project delays and order cancellations affecting our
large-scale business, and an unpredictable policy environment. In
addition to these broader challenges, we recently experienced
Customs and Border Protection's (CBP) first-ever detentions of our
modules being imported into the U.S. from our factories in
Mexico to assess compliance with
the Uyghur Forced Labor Prevention Act (UFLPA). It is our
understanding that these detentions are routine, however, they have
effectively stopped all of our shipments into the U.S., a market
that accounted for over 60% of our second quarter revenue, and are
causing intense pressure on the Company's revenue realization and
cash flow. We have no visibility into the CBP's process or timing,
and we are therefore uncertain as to when we will be able to
recommence deliveries into our largest end-market.
Because of this unprecedented level of uncertainty, we are
currently unable to provide financial guidance for the third
quarter and are therefore withdrawing full year 2024 revenue and
adjusted EBITDA guidance. However, we expect that our third quarter
revenue will decline significantly from the second quarter for the
reasons discussed above. Due to these uncertainties as well as the
rolling closing of the recapitalization-related transactions and
related note conversions, we will not conduct a conference call to
discuss second quarter results. Instead, we are providing an
overview of our business as detailed in this letter. We intend to
resume quarterly earnings conference calls once the business has
stabilized, and we can offer more meaningful insights on current
business metrics and future expectations.
We are taking aggressive actions to address the challenges we
face. We recently improved our balance sheet by securing
consequential new financing and renegotiating maturing debt. We
have put a special committee in place to drive transformation, and
we are evaluating several aspects of our operations to respond to
the new market environment. We share below some of the actions we
are taking to address the current challenges, and resume growth and
profitability.
First, we will review second quarter results, which were largely
in line with our expectations.
Business Overview
The Company's second quarter 2024 revenue stood at $184 million and total shipments were 526 MW.
There were no sales to SunPower Corp., as the committed volumes
under the settlement and release agreement were fully delivered
during the previous quarter. GAAP operating expenses for this
quarter stood at $62 million and
included a provision for expected credit losses of $11 million resulting from SunPower Corp.'s
recent bankruptcy filing, largely associated with unsecured
indemnifications for ongoing litigation and warranty claims
inherited from the spin off in 2020.
In our utility scale business, we increased revenue by 12%
sequentially to $109 million driven
by higher volume shipments to U.S. customers. However, we
anticipate that the project push-outs and contract cancellations
announced last quarter as well as the current CBP detentions will
result in significantly lower shipment run-rates in the second half
of this year. Looking forward, we are also facing considerable
risks and uncertainties in this business primarily due to trade
policy issues, including the re-imposition of Section 201 bifacial
tariffs on modules imported into the U.S. from our Mexicali, Mexico facility as well as proposed
new AD/CVD tariffs on solar cells manufactured at our Malaysian
cell fab. While we believe that these types of import tariffs will
be fundamentally supportive for our planned Albuquerque cell and
module factories, they critically impact the economic viability of
our current supply chain. For this reason, we are evaluating the
shutdown of our Malaysian Fab 3, where we have been manufacturing
solar cells since 2011, and plan to re-tool Mexicali Modco for P7
TOPCon with solar cells sourced from independent third parties in
the future. In this event, we would expect associated charges
of at least $100 million in the
second half of the year, a large majority of which would be
non-cash charges for related asset write-downs.
Revenue for our DG business landed at $75
million for the second quarter of 2024. This represents 11%
sequential growth, after excluding sales to SunPower Corp. from the
first quarter and IP licensing fees of $10
million in connection with the sale of our former joint
venture HSPV from the second quarter. The growth was driven in part
by continuing to clear inventory of our older generation P-series
products. The competitive landscape in our European and Australian
markets remains challenging, with extreme price pressure due to
significant oversupply from Southeast
Asia and China. In the
U.S., since terminating our contract with SunPower Corp. last year,
we have been heavily focused on building out our own U.S. dealer
channel. While the weak demand environment and the impact of
SunPower Corp.'s bankruptcy has affected all market players and
slowed the growth of our channel partners, we added more than 25
new partners during the quarter and believe that SunPower Corp.'s
bankruptcy may create an opportunity to attract a dealer base that
is used to selling our products.
Recapitalization
We are taking critical actions to fund our immediate cash needs,
provide capital to invest in our transformation initiatives, and to
reduce pressures from debt maturities. As we close the transactions
described below, we believe we will be on an improved financial
footing, with a strengthened balance sheet, and higher equity book
value.
Unfortunately, these transactions have significantly diluted and
will continue to dilute current shareholders. Total shares
outstanding increased from 55.7 million prior to the restructuring
to approximately 1.4 billion currently. We expect further
dilution to existing shareholders as detailed later in this
section. The Company's proposed 100 for 1 reverse share split was
approved by its shareholders during the recent Annual General
Meeting and once effected is intended to increase the market price
per share to regain compliance with the Nasdaq
listing-requirements.
The Company has made substantial progress on its capital raising
and debt restructuring initiatives, as announced previously. On
June 20, 2024, Maxeon completed the
sale of $97.5 million of 9.00%
Convertible First Lien Senior Secured Notes due 2029 to TZE.
Additionally, as of August 30, 2024,
TZE has completed the $100 million equity investment in Maxeon
and has become the controlling shareholder of the Company. Further,
as of August 30, 2024, 99% or
$137.2 million principal value of the
Tranche A Second Lien Convertible Bonds converted to equity, and
the remaining $1.7 million principal
value Tranche A bonds are scheduled to convert on or before
September 9, 2024. Substantially all
of the Company's debt is comprised of convertible bonds, and total
Company debt has reduced from $366
million at the end of the second quarter to $278 million on a pro forma basis including the
effect of Tranche A bond conversions to date. The Company has
$1.5 million principal value of
convertible bonds due to mature in July
2025, which the holders may submit in the third quarter to
be redeemed by the company per the terms of the indenture as a
result of a fundamental change. Excluding this, there are no
scheduled debt maturities before January
2028. The TZE $100 million equity investment and
Tranche A bond transactions helped to increase Maxeon's equity from
negative $22 million at the end of
the second quarter to positive $163
million on a pro forma basis.
The conversion prices of the Tranche B Adjustable-Rate
Convertible Second Lien Senior Secured Notes, Variable Rate
Convertible First Lien Senior Secured Notes and 9.00% Convertible
First Lien Senior Secured Notes were all reset using the 10-day
VWAP from August 14 to 27, 2024, at
an average price of $0.1608 per
share. As a result, these notes are convertible into 505 million,
1,287 million and 606 million shares, respectively, should the
Company elect to settle any conversion requests fully in shares and
not in cash or a combination of cash and shares. As part of the
restructuring, warrants for ordinary shares were issued to the
Tranche A Adjustable-Rate Convertible Second Lien Senior Secured
noteholders. The exercise price to purchase ordinary shares was set
at a 31.3% premium to the same 10-day VWAP period at a price of
$0.2111 per share. These warrants are
exercisable into 9.925% of fully diluted shares outstanding. TZE
now controls approximately 69.3% of Maxeon's total outstanding
shares and has the ability to purchase additional shares to prevent
dilution of its ownership position if Tranche B notes or the
Tranche A noteholder warrants are converted.
Transformation Initiatives
We have established a Strategy and Transformation Office ("STO")
led by Mr. Luo Luo Xu, who currently serves as a Board member
designated by TZE and has joined the executive team as Chief
Transformation Officer, reporting to Maxeon's CEO. Maxeon's Board
has also established a Strategy and Transformation Committee, with
a focus on the implementation of transformation activities. The STO
will develop and recommend initiatives to accelerate Maxeon's
return to profitability by driving an intensive company-wide focus
on improved cost, efficiency and competitiveness. It is also
exploring various strategic initiatives to reposition the Company
and accelerate growth. In anticipation of the various trade and
tariff issues mentioned above, the STO is planning contingencies to
reposition and adapt our supply chain and identify opportunities to
leverage support from TZE and their parent company TCL. More
details on key strategy and transformation initiatives will be
shared in the coming months.
Leadership Changes
As previously announced, Mr. Kai Strohbecke stepped down as
Maxeon's Chief Financial Officer at the end of August 2024 and Mr. Ken
Olson, who joined Maxeon as Senior Vice President and Group
Treasurer in October 2023, has taken
on the role of Interim Chief Financial Officer effective
September 1, 2024. We would like to
take this opportunity to thank Mr. Kai Strohbecke for his exemplary
leadership and contributions as Maxeon's CFO over the past three
and a half years.
CBP Detentions
In July 2024, Maxeon experienced
our first-ever detentions by CBP of modules imported from
Mexico into the U.S. These
detentions are intended to review whether Maxeon's products comply
with anti-forced labor provisions as set out in the UFLPA. Since
then, all of Maxeon's imports of solar modules into the U.S. have
been detained by CBP. These detentions involved both Performance
line panels manufactured in our Mexicali factory for utility scale customers
as well as IBC panels manufactured in our Ensenada factory for DG customers. CBP has
explained that these are routine detentions not related to any
concerns specific to Maxeon. We are fully cooperating with CBP's
information requests and are in continuous contact with CBP
authorities to help facilitate CBP's investigation and respond to
CBP's inquiries. While we continue to work towards an
expedited release of Maxeon's modules, at this time we do not have
any indication from CBP as to when the detained shipments might be
released and when we will be able to resume module imports into the
U.S.. Maxeon has been a long time ESG-leader in the solar industry
and a supporter of the UFLPA since its inception. Maxeon continues
to require a UFLPA-compliant supply chain for its products imported
into the U.S., including polysilicon produced outside of
China for which we pay a
meaningful premium compared to polysilicon produced within
China. Based on our internal and
third-party reviews, we believe our supply chains are in compliance
with all relevant rules and regulations, as well as leading
ESG-standards, but have no visibility into the CBP's process or
timing, and are therefore uncertain as to when we will be able to
recommence deliveries into our largest end-market.
Conclusion
Maxeon faces significant and unprecedented challenges primarily
due to external market and policy factors. At the same time,
our assets include almost 40 years of industry experience, a
reputation for technology and product leadership, the industry's
leading IP portfolio, a unique DG channel strategy, and a strong
legacy of participation in utility-scale projects in the U.S.
With critical financial support now in place from TZE, we look
forward to utilizing these assets to first stabilize our business
and then restore growth and profitability.
Selected Q2
Unaudited Financial Summary
|
|
(In thousands,
except shipments)
|
Fiscal Q2
2024
|
|
Fiscal Q1
2024
|
|
Fiscal Q2
2023
|
Shipments, in
MW
|
526
|
|
488
|
|
807
|
Revenue
|
$
184,219
|
|
$
187,456
|
|
$
348,373
|
Gross (loss)
profit(1)
|
(7,785)
|
|
(14,871)
|
|
56,223
|
GAAP Operating
expenses
|
61,670
|
|
48,668
|
|
47,830
|
Net income (loss)
attributable to the stockholders(1)
|
11,664
|
|
(80,148)
|
|
(1,509)
|
Capital
expenditures
|
17,707
|
|
19,216
|
|
24,169
|
|
|
|
|
|
|
|
Other Financial
Data(1)
|
(In
thousands)
|
Fiscal Q2
2024
|
|
Fiscal Q1
2024
|
|
Fiscal Q2
2023
|
Non-GAAP Gross (loss)
profit
|
$
(5,794)
|
|
$
(12,888)
|
|
$
56,748
|
Non-GAAP Operating
expenses
|
40,180
|
|
38,520
|
|
40,883
|
Adjusted
EBITDA
|
(36,574)
|
|
(38,977)
|
|
30,240
|
|
|
(1)
|
The Company's use of
Non-GAAP financial information, including a reconciliation to U.S.
GAAP, is provided under "Use of Non-GAAP Financial Measures"
below.
|
For more information
Maxeon's second quarter 2024 financial results and management
commentary can be found on Form 6-K by accessing the Financials
& Filings page of the Investor Relations section of Maxeon's
website at: https://corp.maxeon.com/investor-relations. The Form
6-K and Company's other filings are also available online from the
Securities and Exchange Commission at www.sec.gov.
About Maxeon Solar Technologies
Maxeon Solar Technologies Ltd (NASDAQ: MAXN) is Powering
Positive ChangeTM. Headquartered in Singapore, Maxeon leverages over 35 years of
solar energy leadership and over 1,900 patents to design innovative
and sustainably made solar panels and energy solutions for
residential, commercial and power plant customers. Maxeon's
integrated home energy management is a flexible ecosystem of
products and services, built around the award-winning Maxeon® and
SunPower® brand solar panels. With a network of more than 1,700
trusted partners and distributors, and more than one million
customers worldwide, the Company is a global leader in solar. For
more information about how Maxeon is Powering Positive
ChangeTM visit us at https://www.maxeon.com/, on
LinkedIn and on Twitter @maxeonsolar.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, but not limited to, statements regarding: (a)
our ability to (i) meet short-term and long-term material cash
requirements, (ii) complete an equity, debt or other financing,
refinancing, exchange, or recapitalize our existing debt at
favorable terms, if at all, (iii) service our outstanding debts and
make payments as they come due and (iv) continue as a going
concern; (b) the success of our ongoing restructuring initiatives;
(c) our expectations regarding product pricing trends, demand and
growth projections, including our efforts to enforce our
intellectual property rights against our competitors; (d)
disruptions to our operations and supply chain resulting from,
among other things, government regulatory or enforcement actions,
such as the detentions of our products by the U.S. Customs Border
and Protection for an unforeseeable amount of time, epidemics,
natural disasters or military conflicts, including the duration,
scope and impact on the demand for our products, market disruptions
from the war in Ukraine and the Israel-Hamas-Iran conflict; (e)
anticipated product launch timing and our expectations regarding
ramp, customer acceptance and demand, upsell and expansion
opportunities; (f) our expectations and plans for short- and
long-term strategy, including our anticipated areas of focus and
investment, market expansion, product and technology focus,
implementation of restructuring plans and projected growth and
profitability; (g) our technology outlook, including anticipated
fab capacity expansion and utilization and expected ramp and
production timelines for the Company's next-generation Maxeon 7 and
Performance line solar panels, expected cost reductions, and future
performance; (h) our strategic goals and plans, including our
transformation initiatives and plans regarding supply chain
adaptation, improved costs and efficiencies, capacity expansion,
partnership discussions with respect to the Company's
next-generation technology, and our relationship with our existing
customers, suppliers and partners, and our ability to achieve and
maintain them; (i) our expectations regarding our future
performance and revenues resulting from contracted orders,
bookings, backlog, and pipelines in our sales channels and feedback
from our partners; (j) our projected effective tax rate and changes
to the valuation allowance related to our deferred tax assets; (k)
our efforts to maintain compliance with Nasdaq continued listing
standards, including our anticipated reverse share split; and (l)
our annual fiscal year 2024 guidance regarding our capital
expenditures .
The forward-looking statements can be also identified by
terminology such as "may," "might," "could," "will," "aims,"
"expects," "anticipates," "future," "intends," "plans," "believes,"
"estimates" and similar statements. Among other things, the
quotations from management in this press release and Maxeon's
operations and business outlook contain forward-looking
statements.
These forward-looking statements are based on our current
assumptions, expectations and beliefs and involve substantial risks
and uncertainties that may cause results, performance or
achievement to materially differ from those expressed or implied by
these forward-looking statements. These statements are not
guarantees of future performance and are subject to a number of
risks. The reader should not place undue reliance on these
forward-looking statements, as there can be no assurances that the
plans, initiatives or expectations upon which they are based will
occur. Factors that could cause or contribute to such differences
include, but are not limited to: (1) challenges in executing
transactions key to our strategic plans, transformation initiatives
and ongoing restructuring efforts, including regulatory and
other challenges that may arise; (2) our liquidity, substantial
indebtedness, terms and conditions upon which our indebtedness is
incurred, and ability to obtain additional financing for our
projects, customers and operations on favorable terms, or at
all; (3) our ability to manage supply chain shortages and/or excess
inventory and cost increases and operating expenses; (4) potential
disruptions to our operations and supply chain resulting from,
among other things, government regulatory or enforcement
activities, such as the detentions of our products by the U.S.
Customs Border and Protection for an unforeseeable amount of time,
damage or destruction of facilities operated by our suppliers,
difficulties in hiring or retaining key personnel, epidemics,
natural disasters, including impacts of the war in Ukraine and the Israel-Hamas conflict; (5) our
ability to manage our key customers and suppliers, including the
impact of the termination of the supply agreements with one of the
Company's biggest customers, SunPower Corporation; (6) the success
of our ongoing research and development efforts and our ability to
commercialize new products and services, including products and
services developed through strategic partnerships; (7) competition
in the solar and general energy industry and downward pressure on
selling prices and wholesale energy pricing, including impacts of
inflation, economic recession and foreign exchange rates upon
customer demand; (8) changes in regulation and public policy,
including the imposition and applicability of tariffs and
restriction on imports, exports or cross-border transactions
resulting from geopolitical tensions; (9) our ability to comply
with various tax holiday requirements as well as regulatory changes
or findings affecting the availability of economic incentives
promoting use of solar energy and availability of tax incentives or
imposition of tax duties; (10) fluctuations in our operating
results and in the foreign currencies in which we operate; (11) our
ability to manage our manufacturing capacity, including appropriate
sizing, expansions, closures, or delays and other logistical
difficulties that may arise; (12) unanticipated impact to customer
demand and sales schedules due, among other factors, to the war in
Ukraine and the Israel-Hamas-Iran
conflict, economic recession and environmental disasters and
geopolitical tensions; (13) challenges managing our acquisitions,
joint ventures and partnerships, including our ability to
successfully manage acquired assets and supplier relationships and
regulatory hurdles relating to our equity ownership structure; (14)
reaction by securities or industry analysts to our ongoing
restructuring efforts and annual and/or quarterly guidance, in
combination with our results of operations or other factors, and/
or third party reports or publications, whether accurate or not,
which may cause such securities or industry analysts to cease
publishing research or reports about us, or adversely change their
recommendations regarding our ordinary shares, which may negatively
impact the market price of our ordinary shares and volume of our
stock trading; (15) risk resulting from the Company becoming a
controlled company, and (16) unpredictable outcomes resulting from
our litigation activities, including shareholder litigation,
enforcement of certain intellectual property rights, or other
disputes. Forward-looking and other statements in this report may
also address our corporate sustainability or responsibility
progress, plans, and goals (including environmental matters), and
the inclusion of such statements is not an indication that these
contents are necessarily material to investors or required to be
disclosed in the Company's filings with the SEC. In addition,
historical, current, and forward-looking sustainability-related
statements may be based on standards for measuring progress that
are still developing, internal controls and processes that continue
to evolve, and assumptions that are subject to change in the
future. A detailed discussion of these factors and other risks that
affect our business is included in filings we make with the
Securities and Exchange Commission ("SEC") from time to time,
including our most recent report on Form 20-F, particularly under
the heading "Risk Factors" and Form 6-K filings discussing our
quarterly earnings results. Copies of these filings are available
online from the SEC at www.sec.gov, or on the SEC Filings section
of our Investor Relations website at
https://corp.maxeon.com/investor-relations. All forward-looking
statements in this press release are based on information currently
available to us, and we assume no obligation to update these
forward-looking statements in light of new information or future
events.
Use of Non-GAAP Financial Measures
We present certain non-GAAP measures such as non-GAAP gross
(loss) profit, non-GAAP operating expenses and earnings before
interest, taxes, depreciation and amortization ("EBITDA") adjusted
for stock-based compensation, restructuring charges and fees,
remeasurement loss on prepaid forward and physical delivery
forward, loss on extinguishment of debt and equity in income of
unconsolidated investees and associated gains ("Adjusted EBITDA")
to supplement our consolidated financial results presented in
accordance with GAAP. Non-GAAP gross (loss) profit is defined
as gross (loss) profit excluding stock-based compensation and
restructuring charges and fees. Non-GAAP operating expenses is
defined as operating expenses excluding stock-based compensation
and restructuring charges and fees.
We believe that non-GAAP gross (loss) profit, non-GAAP operating
expenses and Adjusted EBITDA provide greater transparency into
management's view and assessment of the Company's ongoing operating
performance by removing items management believes are not
representative of our continuing operations and may distort our
longer-term operating trends. We believe these measures are useful
to help enhance the comparability of our results of operations
across different reporting periods on a consistent basis and with
our competitors, distinct from items that are infrequent or not
associated with the Company's core operations as presented above.
We also use these non-GAAP measures internally to assess our
business, financial performance and current and historical results,
as well as for strategic decision-making and forecasting future
results. Given our use of non-GAAP measures, we believe that these
measures may be important to investors in understanding our
operating results as seen through the eyes of management. These
non-GAAP measures are neither prepared in accordance with GAAP nor
are they intended to be a replacement for GAAP financial data,
should be reviewed together with GAAP measures and may be different
from non-GAAP measures used by other companies.
As presented in the "Reconciliation of Non-GAAP Financial
Measures" section, each of the non-GAAP financial measures excludes
one or more of the following items in arriving to the non-GAAP
measures:
- Stock-based compensation expense. Stock-based
compensation relates primarily to equity incentive awards.
Stock-based compensation is a non-cash expense that is dependent on
market forces that are difficult to predict and is excluded from
non-GAAP gross (loss) profit, non-GAAP operating expense and
Adjusted EBITDA. Management believes that this adjustment for
stock-based compensation expense provides investors with a basis to
measure our core performance, including the ability to compare our
performance with the performance of other companies, without the
period-to-period variability created by stock-based
compensation.
- Provision for expected credit losses. This relates to
the expected credit loss in relation to the financial assets under
the Separation and Distribution Agreement dated November 8, 2019 (the "SDA") entered into with
SunPower Corporation ("SunPower") in connection with the Company's
spin-off from SunPower. Such loss is excluded from non-GAAP
operating expense and Adjusted EBITDA as this relates to SunPower's
business which Maxeon did not and will not have economic benefits
to, as the Company's involvement is solely through SunPower's
indemnification obligations set forth in the SDA. As such,
management believes that this is not part of core operating
activity and it is appropriate to exclude the provision for
expected credit losses from our non-GAAP financial measures as it
is not reflective of ongoing operating results nor do these charges
contribute to a meaningful evaluation of our past operating
performance.
- Restructuring charges and fees (benefits). We incur
restructuring charges, inventory impairment and other inventory
related costs associated with the re-engineering of our IBC
capacity, and fees related to reorganization plans aimed towards
realigning resources consistent with our global strategy and
improving its overall operating efficiency and cost structure.
Restructuring charges and fees (benefits) are excluded from
non-GAAP operating expenses and Adjusted EBITDA because they are
not considered core operating activities. Although we have engaged
in restructuring activities and initiatives, past activities have
been discrete events based on unique sets of business objectives.
As such, management believes that it is appropriate to exclude
restructuring charges and fees (benefits) from our non-GAAP
financial measures as they are not reflective of ongoing operating
results nor do these charges contribute to a meaningful evaluation
of our past operating performance.
- Gain on extinguishment of debt. This relates to the gain
that arose from the substantial modification of our Green
Convertible Senior Notes due 2025 and 2027 Notes in June 2024. Gain on debt extinguishment is
excluded from Adjusted EBITDA because it is not considered part of
core operating activities. Such activities are discrete events
based on unique sets of business objectives. As such, management
believes that it is appropriate to exclude the gain on
extinguishment of debt from our non-GAAP financial measures as it
is not reflective of ongoing operating results nor do these charges
contribute to a meaningful evaluation of our past operating
performance.
- Remeasurement loss (gain) on prepaid forward and physical
delivery forward. This relates to the mark-to-market fair value
remeasurement of privately negotiated prepaid forward and physical
delivery transactions. The transactions were entered into in
connection with the issuance on July 17,
2020 of the 6.50% Green Convertible Senior Notes due 2025
for an aggregate principal amount of $200
million. The prepaid forward is remeasured to fair value at
the end of each reporting period, with changes in fair value booked
in earnings. The fair value of the prepaid forward is primarily
affected by the Company's share price. The physical delivery
forward was remeasured to fair value at the end of the Note
Valuation Period on September 29,
2020, and was reclassified to equity after remeasurement,
and will not be subsequently remeasured. The fair value of the
physical delivery forward was primarily affected by the Company's
share price. The remeasurement loss (gain) on prepaid forward and
physical delivery forward is excluded from Adjusted EBITDA because
it is not considered core operating activities. As such, management
believes that it is appropriate to exclude the mark-to-market
adjustments from our Adjusted EBITDA as it is not reflective of
ongoing operating results nor do the loss contribute to a
meaningful evaluation of our past operating performance.
- Equity in income of unconsolidated investees and related
gains. This relates to the income on our former unconsolidated
equity investment Huansheng JV and gains on such investment on
divestment. This is excluded from our Adjusted EBITDA financial
measure as it is non-cash in nature and not reflective of our core
operational performance. As such, management believes that it is
appropriate to exclude such charges as they do not contribute to a
meaningful evaluation of our performance.
Reconciliation of
Non-GAAP Financial Measures
|
|
|
Three Months
Ended
|
(In
thousands)
|
June 30,
2024
|
|
March 31,
2024
|
|
July 2,
2023
|
Gross (loss)
profit
|
$
(7,785)
|
|
$
(14,871)
|
|
$
56,223
|
Stock-based
compensation
|
166
|
|
696
|
|
525
|
Restructuring charges
and fees
|
1,825
|
|
1,287
|
|
—
|
Non-GAAP Gross
(loss) profit
|
(5,794)
|
|
(12,888)
|
|
56,748
|
|
|
|
|
|
|
GAAP Operating
expenses
|
61,670
|
|
48,668
|
|
47,830
|
Stock-based
compensation
|
(5,070)
|
|
(6,182)
|
|
(7,071)
|
Provision for expected
credit losses
|
(11,462)
|
|
—
|
|
—
|
Restructuring (charges
and fees) benefits
|
(4,958)
|
|
(3,966)
|
|
124
|
Non-GAAP Operating
expenses
|
40,180
|
|
38,520
|
|
40,883
|
|
|
|
|
|
|
Net income (loss)
attributable to the stockholders
|
11,664
|
|
(80,148)
|
|
(1,509)
|
Interest expense,
net
|
10,109
|
|
8,741
|
|
8,903
|
Provision for income
taxes
|
3,212
|
|
1,203
|
|
5,893
|
Depreciation
|
10,338
|
|
10,330
|
|
14,546
|
Amortization
|
220
|
|
228
|
|
45
|
EBITDA
|
35,543
|
|
(59,646)
|
|
27,878
|
Stock-based
compensation
|
5,236
|
|
6,878
|
|
7,596
|
Provision for expected
credit losses
|
11,462
|
|
—
|
|
—
|
Gain on extinguishment
of debt
|
(77,266)
|
|
—
|
|
—
|
Restructuring charges
and fees (benefits)
|
6,783
|
|
5,253
|
|
(124)
|
Remeasurement loss
(gain) on prepaid forward
|
5,751
|
|
8,538
|
|
(4,718)
|
Equity in income of
unconsolidated investees and related gains
|
(24,083)
|
|
—
|
|
(392)
|
Adjusted
EBITDA
|
(36,574)
|
|
(38,977)
|
|
30,240
|
©2024 Maxeon Solar Technologies, Ltd. All rights
reserved. MAXEON is a registered trademark of Maxeon Solar
Technologies, Ltd. Visit https://corp.maxeon.com/trademarks for
more information.
MAXEON SOLAR
TECHNOLOGIES, LTD.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands,
except for shares data)
|
|
|
As of
|
|
June 30,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
81,381
|
|
$
190,169
|
Restricted short-term
marketable securities
|
1,337
|
|
1,403
|
Accounts receivable,
net
|
32,035
|
|
62,687
|
Inventories
|
230,912
|
|
308,948
|
Prepaid expenses and
other current assets
|
43,430
|
|
55,812
|
Total current
assets
|
$
389,095
|
|
$
619,019
|
Property, plant and
equipment, net
|
291,713
|
|
280,025
|
Operating lease right
of use assets
|
24,219
|
|
22,824
|
Other intangible
assets, net
|
2,915
|
|
3,352
|
Goodwill
|
7,879
|
|
7,879
|
Other long-term
assets
|
48,335
|
|
68,910
|
Total
assets
|
$
764,156
|
|
$
1,002,009
|
Liabilities and
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
145,108
|
|
$
153,020
|
Accrued
liabilities
|
120,421
|
|
113,456
|
Contract liabilities,
current portion
|
11,125
|
|
134,171
|
Short-term
debt
|
2,113
|
|
25,432
|
Operating lease
liabilities, current portion
|
6,913
|
|
5,857
|
Total current
liabilities
|
$
285,680
|
|
$
431,936
|
Long-term
debt
|
973
|
|
1,203
|
Contract liabilities,
net of current portion
|
73,548
|
|
113,564
|
Operating lease
liabilities, net of current portion
|
24,117
|
|
19,611
|
Convertible
debt
|
363,180
|
|
385,558
|
Deferred tax
liabilities
|
6,994
|
|
7,001
|
Other long-term
liabilities
|
31,474
|
|
38,494
|
Total
liabilities
|
$
785,966
|
|
$
997,367
|
Commitments and
contingencies
|
|
|
|
Equity:
|
|
|
|
Common stock, no par
value (55,705,553 and 53,959,109 issued and outstanding as of June
30, 2024 and December 31, 2023, respectively)
|
$
—
|
|
$
—
|
Additional paid-in
capital
|
853,164
|
|
811,361
|
Accumulated
deficit
|
(864,576)
|
|
(796,092)
|
Accumulated other
comprehensive loss
|
(15,514)
|
|
(16,378)
|
Equity attributable to
the Company
|
(26,926)
|
|
(1,109)
|
Noncontrolling
interests
|
5,116
|
|
5,751
|
Total equity
|
(21,810)
|
|
4,642
|
Total liabilities
and equity
|
$
764,156
|
|
$
1,002,009
|
MAXEON SOLAR
TECHNOLOGIES, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands,
except per share data)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
July 2,
2023
|
|
June 30,
2024
|
|
July 2,
2023
|
Revenue
|
$
184,219
|
|
$
348,373
|
|
$
371,675
|
|
$
666,705
|
Cost of
revenue
|
192,004
|
|
292,150
|
|
394,331
|
|
556,857
|
Gross (loss)
profit
|
(7,785)
|
|
56,223
|
|
(22,656)
|
|
109,848
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
9,425
|
|
13,012
|
|
19,322
|
|
24,088
|
Sales, general and
administrative
|
52,315
|
|
34,492
|
|
88,034
|
|
65,520
|
Restructuring
(benefits)/charges
|
(70)
|
|
326
|
|
2,982
|
|
143
|
Total operating
expenses
|
61,670
|
|
47,830
|
|
110,338
|
|
89,751
|
Operating (loss)
income
|
(69,455)
|
|
8,393
|
|
(132,994)
|
|
20,097
|
Other income (expense),
net
|
|
|
|
|
|
|
|
Interest
expense
|
(10,623)
|
|
(11,070)
|
|
(20,177)
|
|
(21,873)
|
Interest
income
|
514
|
|
2,167
|
|
1,327
|
|
3,971
|
Gain on extinguishment
of debt
|
77,266
|
|
—
|
|
77,266
|
|
—
|
Other, net
|
16,595
|
|
4,550
|
|
9,874
|
|
28,993
|
Other income
(expense), net
|
83,752
|
|
(4,353)
|
|
68,290
|
|
11,091
|
Income (loss) before
income taxes and equity in income (losses) of unconsolidated
investees
|
14,297
|
|
4,040
|
|
(64,704)
|
|
31,188
|
Provision for income
taxes
|
(3,212)
|
|
(5,893)
|
|
(4,415)
|
|
(11,877)
|
Equity in income
(losses) of unconsolidated investees
|
—
|
|
392
|
|
—
|
|
(354)
|
Net income
(loss)
|
11,085
|
|
(1,461)
|
|
(69,119)
|
|
18,957
|
Net loss (income)
attributable to noncontrolling interests
|
579
|
|
(48)
|
|
635
|
|
(195)
|
Net income (loss)
attributable to the stockholders
|
$
11,664
|
|
$
(1,509)
|
|
$
(68,484)
|
|
$
18,762
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
0.23
|
|
$
(0.03)
|
|
$
(1.35)
|
|
$
0.43
|
Diluted
|
0.03
|
|
(0.03)
|
|
(1.35)
|
|
0.43
|
|
|
|
|
|
|
|
|
Weighted average shares
used to compute net income (loss) per share:
|
|
|
|
|
|
|
|
Basic
|
51,198
|
|
45,158
|
|
50,851
|
|
43,273
|
Diluted
|
668,426
|
|
45,158
|
|
50,851
|
|
44,110
|
MAXEON SOLAR
TECHNOLOGIES, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(In
thousands)
|
|
|
Shares
|
|
Amount
|
|
Additional
Paid
In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Equity
Attributable
to
the
Company
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
Balance at December
31, 2023
|
53,959
|
|
$
—
|
|
$
811,361
|
|
$
(796,092)
|
|
$
(16,378)
|
|
$
(1,109)
|
|
$
5,751
|
|
$
4,642
|
Net loss
|
—
|
|
—
|
|
—
|
|
(80,148)
|
|
—
|
|
(80,148)
|
|
(56)
|
|
(80,204)
|
Issuance of common
stock for stock-based compensation, net of tax withheld
|
725
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Recognition of
stock-based compensation
|
—
|
|
—
|
|
7,027
|
|
—
|
|
—
|
|
7,027
|
|
—
|
|
7,027
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
—
|
|
1,019
|
|
1,019
|
|
—
|
|
1,019
|
Balance at March 31,
2024
|
54,684
|
|
$
—
|
|
$
818,388
|
|
$
(876,240)
|
|
$
(15,359)
|
|
$
(73,211)
|
|
$
5,695
|
|
$
(67,516)
|
Net loss
|
—
|
|
$
—
|
|
$
—
|
|
$
11,664
|
|
$
—
|
|
$
11,664
|
|
$
(579)
|
|
$
11,085
|
Issuance of common
stock for stock-based compensation, net of tax withheld
|
201
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Issuance of common
stock for settlement of obligation
|
821
|
|
—
|
|
4,140
|
|
—
|
|
—
|
|
4,140
|
|
—
|
|
4,140
|
Issuance of warrants,
net of issuance cost
|
—
|
|
—
|
|
24,771
|
|
—
|
|
—
|
|
24,771
|
|
—
|
|
24,771
|
Recognition of
stock-based compensation
|
—
|
|
—
|
|
5,865
|
|
—
|
|
—
|
|
5,865
|
|
—
|
|
5,865
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
—
|
|
(155)
|
|
(155)
|
|
—
|
|
(155)
|
Balance at June 30,
2024
|
55,706
|
|
—
|
|
853,164
|
|
(864,576)
|
|
(15,514)
|
|
(26,926)
|
|
5,116
|
|
(21,810)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Additional
Paid
In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Equity
Attributable
to
the
Company
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
Balance at January
1, 2023
|
45,033
|
|
$
—
|
|
$
584,808
|
|
$
(520,263)
|
|
$
(22,108)
|
|
$
42,437
|
|
$
5,633
|
|
$
48,070
|
Net loss
|
—
|
|
—
|
|
—
|
|
20,271
|
|
—
|
|
20,271
|
|
147
|
|
20,418
|
Issuance of common
stock for stock-based compensation, net of tax withheld
|
377
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Recognition of
stock-based compensation
|
—
|
|
—
|
|
4,033
|
|
—
|
|
—
|
|
4,033
|
|
—
|
|
4,033
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
—
|
|
1,627
|
|
1,627
|
|
—
|
|
1,627
|
Balance at April 2,
2023
|
45,410
|
|
$
—
|
|
$
588,841
|
|
$
(499,992)
|
|
$
(20,481)
|
|
$
68,368
|
|
$
5,780
|
|
$
74,148
|
Net (loss)
income
|
—
|
|
—
|
|
—
|
|
(1,509)
|
|
—
|
|
(1,509)
|
|
48
|
|
(1,461)
|
Issuance of common
stock, net of issuance cost
|
7,120
|
|
|
|
193,491
|
|
—
|
|
—
|
|
193,491
|
|
—
|
|
193,491
|
Issuance of common
stock for stock-based compensation, net of tax withheld
|
116
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Recognition of
stock-based compensation
|
—
|
|
—
|
|
6,980
|
|
—
|
|
—
|
|
6,980
|
|
—
|
|
6,980
|
Other comprehensive
loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(65)
|
|
(65)
|
|
—
|
|
(65)
|
Balance at July 2,
2023
|
52,646
|
|
—
|
|
789,312
|
|
(501,501)
|
|
(20,546)
|
|
267,265
|
|
5,828
|
|
273,093
|
MAXEON SOLAR
TECHNOLOGIES, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In
thousands)
|
|
|
Six Months
Ended
|
|
June 30,
2024
|
|
July 2,
2023
|
Cash flows from
operating activities
|
|
|
|
Net (loss)
profit
|
$
(69,119)
|
|
$
18,957
|
Adjustments to
reconcile net (loss) profit to operating cash flows
|
|
|
|
Depreciation and
amortization
|
21,116
|
|
29,042
|
Stock-based
compensation
|
12,114
|
|
12,257
|
Non-cash interest
expense
|
4,056
|
|
4,657
|
Gain on disposal of
equity in unconsolidated investees
|
(24,083)
|
|
—
|
Equity in losses of
unconsolidated investees
|
—
|
|
354
|
Deferred income
taxes
|
(7)
|
|
(460)
|
Loss on impairment of
property, plant and equipment
|
1,542
|
|
442
|
Loss on impairment of
right of use of asset
|
4,525
|
|
—
|
(Gain) loss on
disposal of property, plant and equipment
|
(837)
|
|
9
|
Gain on debt
extinguishment
|
(77,266)
|
|
—
|
Remeasurement loss
(gain) on prepaid forward
|
14,289
|
|
(28,567)
|
Provision for
(utilization of) inventory reserves
|
15,767
|
|
(10,377)
|
Provision for expected
credit losses
|
11,655
|
|
201
|
Other, net
|
1,048
|
|
(181)
|
Changes in operating
assets and liabilities
|
|
|
|
Accounts
receivable
|
22,202
|
|
(23,850)
|
Inventories
|
60,427
|
|
(65,706)
|
Prepaid expenses and
other assets
|
11,632
|
|
1,384
|
Operating lease
right-of-use assets
|
3,006
|
|
2,303
|
Accounts payable and
other accrued liabilities
|
(33,018)
|
|
(13,507)
|
Contract
liabilities
|
(122,861)
|
|
48,661
|
Operating lease
liabilities
|
(3,364)
|
|
(1,928)
|
Net cash used in
operating activities
|
(147,176)
|
|
(26,309)
|
Cash flows from
investing activities
|
|
|
|
Purchases of property,
plant and equipment
|
(36,923)
|
|
(40,669)
|
Purchases of
intangible assets
|
(10)
|
|
(135)
|
Proceeds from maturity
of short-term securities
|
—
|
|
76,000
|
Purchase of short-term
securities
|
—
|
|
(60,000)
|
Purchase of restricted
short-term marketable securities
|
—
|
|
(10)
|
Proceeds from disposal
of equity in unconsolidated investees
|
24,000
|
|
—
|
Proceeds from disposal
of asset held for sale
|
462
|
|
—
|
Proceeds from disposal
of property, plant and equipment
|
824
|
|
—
|
Net cash used in
investing activities
|
(11,647)
|
|
(24,814)
|
Cash flows from
financing activities
|
|
|
|
Proceeds from
debt
|
51,249
|
|
114,539
|
Repayment of
debt
|
(74,572)
|
|
(129,526)
|
Repayment of finance
lease obligations
|
(258)
|
|
(252)
|
Payment for
transaction costs for ongoing equity issuance
|
(2,424)
|
|
—
|
Net proceeds from
issuance of common stock
|
—
|
|
194,226
|
Net proceeds from
issuance and modification of convertible notes and
warrants
|
74,364
|
|
—
|
Net cash provided by
financing activities
|
$
48,359
|
|
$
178,987
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(94)
|
|
81
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
$
(110,558)
|
|
$
127,945
|
Cash, cash equivalents
and restricted cash, beginning of period
|
195,511
|
|
267,961
|
Cash, cash equivalents
and restricted cash, end of period
|
$
84,953
|
|
$
395,906
|
Non-cash
transactions
|
|
|
|
Property, plant and
equipment purchases funded by liabilities
|
$
1,910
|
|
$
16,485
|
Interest paid in
shares
|
4,140
|
|
—
|
Interest paid by
issuance of convertible notes
|
5,519
|
|
—
|
Right-of-use assets
obtained in exchange for lease obligations
|
7,986
|
|
10,322
|
The following table reconciles our cash and cash equivalents and
restricted cash reported on our Condensed Consolidated Balance
Sheets and the cash, cash equivalents and restricted cash reported
on our Condensed Consolidated Statements of Cash Flows as of
June 30, 2024 and July 2, 2023:
(In
thousands)
|
June 30,
2024
|
|
July 2,
2023
|
Cash and cash
equivalents
|
$
81,381
|
|
$
375,461
|
Restricted cash,
current portion, included in Prepaid expenses and other current
assets
|
3,474
|
|
20,443
|
Restricted cash, net of
current portion, included in Other long-term assets
|
98
|
|
2
|
Total cash, cash
equivalents and restricted cash shown in Condensed Consolidated
Statements of Cash Flows
|
$
84,953
|
|
$
395,906
|
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SOURCE Maxeon Solar Technologies, Ltd.