SAN JOSE, Calif., Dec. 7, 2016 /PRNewswire/ -- SunPower Corp.
(NASDAQ:SPWR) today announced a broad restructuring program to
position the company for long term, sustainable growth.
"As we announced in our third quarter 2016 earnings release,
given the current market dislocation, we have made the strategic
decision to implement a broad restructuring program to position the
company for sustained, long term profitability," said Tom Werner, SunPower president and CEO. "We
believe that our restructuring initiatives will enable us to
successfully navigate through the current market transition and
maximize cash flow while successfully positioning the company for
the next phase of industry growth."
The company will implement the following
initiatives:
- Rationalize capacity to balance production with near-term
profitable demand through the closure of its ~700-megawatt (MW)
nameplate capacity Fab 2 facility
- Implement a global workforce reduction of approximately 25
percent or 2,500 employees
- Reduce 2017 annual operating expenses to less than $350 million
- Substantially decrease 2016 inventory to improve working
capital and de-lever its balance sheet
- Reduce annual 2017 capital expenditure by more than 50 percent
to approximately $100 million
- Continue to invest in next generation cell and module
technology as well as complete solutions
As a result of these initiatives, the company expects to incur
total restructuring charges of $225 million
to $275 million through the end of 2017 of which
approximately 30 percent will be in cash.
"We believe these actions, which are fully supported by our
board of directors, are important to position the company for
sustained profitability through the current industry
transition. We are committed to our diversified go to market
strategy, continuing to invest in our industry leading technology
and product solutions, reducing our operational and manufacturing
cost structure and continuing to allocate resources to those areas
that will improve our global competitive position. With solar
at grid parity in many markets, we believe the long-term industry
opportunity has never been greater," concluded
Werner.
"This comprehensive restructuring program will enable us to
successfully navigate the current challenging industry conditions
while positioning us for success over the long term," said
Chuck Boynton, SunPower chief
financial officer. "In the short term, we remain focused on
improving working capital and maximizing cash flow which will
strengthen our balance sheet while providing the resources
necessary to fund our strategic growth plans."
Financial Outlook
As a result of its announced and
previous initiatives, the company will record restructuring charges
of at least $150 million on a GAAP
basis in the fourth quarter of 2016. Also, consistent with its
focus on increasing cash flow, the company will record a fourth
quarter GAAP and non-GAAP charge in the range of $50 million to $55 million as a result of the
anticipated sale of above market polysilicon. The company's
previously disclosed 2016 fiscal year guidance did not reflect the
impact of these two fourth quarter charges.
Additionally, the company is providing the following key
financial metrics for 2017.
Revenue of $1.8 billion to $2.3
billion on a GAAP basis and $2.1
billion to $2.6 billion on a non-GAAP basis, non-GAAP
operational expenses of less than $350
million, capital expenditures of approximately $100 million, gigawatts (GW) deployed in the
range of 1.3 GW to 1.6 GW. Also, the company expects to record GAAP
restructuring charges totaling $75 million
to $125 million in fiscal year 2017.
Additionally, the company expects to generate positive cash flow
from operations through the end of fiscal year 2017 and exit the
year with approximately $300 million
in cash. The company believes that cash flow and liquidity
are the key evaluation metrics for its investors.
The company will host a conference call for investors this
morning to discuss its restructuring program and 2017 financial
outlook at 5:30 a.m. Pacific
Time. The call will be webcast and can be accessed
from SunPower's website at
http://investors.sunpower.com/events.cfm.
This press release contains both GAAP and non-GAAP financial
information. Non-GAAP figures are reconciled to the closest GAAP
equivalent categories in the financial attachment of this press
release. Please note that the company has posted supplemental
slides related to today's announcement on the Events and
Presentations section of SunPower's Investor Relations page at
http://investors.sunpower.com/events.cfm.
About SunPower
As one of the world's most innovative
and sustainable energy companies, SunPower Corp. (NASDAQ:SPWR)
provides a diverse group of customers with complete solar solutions
and services. Residential customers, businesses, governments,
schools and utilities around the globe rely on SunPower's more than
30 years of proven experience. From the first flip of the switch,
SunPower delivers maximum value and performance throughout the long
life of every solar system. Headquartered in Silicon Valley,
SunPower has dedicated, customer-focused employees in Africa, Asia,
Australia, Europe, and North and South America. For more information about how
SunPower is changing the way our world is powered,
visit www.sunpower.com.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not
limited to, statements regarding: (a) our positioning for future
success, long-term profitability, competitive position, and our
ability to successfully navigate current market conditions and
succeed in the next phase of industry growth; (b) our expectations
for the solar industry and the markets we serve, including
near-term market conditions, the long-term fundamentals for solar
power, and prospects for long-term industry growth; (c) our
restructuring and cost reduction plans; (d) our expectations for
the timing, success and financial impact of our restructuring and
other initiatives, including impact on our balance sheet, long-term
cash flow and annual operating and other expenses; (e) our ability
to improve working capital, maximize cash flow, reduce costs,
balance production with near-term profitable demand, lower
inventory, reduce capital expenditures, improve liquidity, allocate
investments, appropriately size our manufacturing and fund our
strategic plans, and to meet any of our goals in respect of any of
the foregoing measures; (f) anticipated restructuring and other
accounting charges; and (g) key financial metrics for fiscal year
2017, including GAAP and non-GAAP revenue, operational expenses,
capital expenditures and gigawatts deployed. 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.
Factors that could cause or contribute to such differences include,
but are not limited to: (1) competition in the solar and general
energy industry and downward pressure on selling prices and
wholesale energy pricing; (2) our liquidity, substantial
indebtedness, and ability to obtain additional financing for our
projects and customers; (3) regulatory changes and the availability
of economic incentives promoting use of solar energy; (4)
challenges inherent in constructing certain of our large projects;
(5) 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; (6)
fluctuations in our operating results; (7) appropriately sizing our
manufacturing capacity and containing manufacturing difficulties
that could arise; (8) challenges managing our joint ventures and
partnerships; (9) challenges executing on our HoldCo and YieldCo
strategies, including the risk that 8point3 Energy Partners may be
unsuccessful; (10) fluctuations or declines in the performance of
our solar panels and other products and solutions; (11) our
ability to identify and successfully implement concrete actions to
meet our cost reduction targets, reduce capital expenditures, and
implement our planned restructuring initiatives, including the
planned realignment of our manufacturing operations and power plant
segment; and (12) the outcomes of previously disclosed litigation.
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 reports on Form 10-K and Form 10-Q, particularly under the
heading "Risk Factors." Copies of these filings are available
online from the SEC or on the SEC Filings section of our Investor
Relations website at investors.sunpower.com. 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.
©2016 SunPower Corporation. All rights reserved. SUNPOWER,
the SUNPOWER logo, HELIX and OASIS are trademarks or registered
trademarks of SunPower Corporation in the U.S. and other countries
as well. Other marks are the property of their respective
owners.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial results presented in
accordance with GAAP, the company uses non-GAAP measures that are
adjusted for certain items from the most directly comparable GAAP
measures, as described below. Management believes that each of
these non-GAAP measures is useful to investors, enabling them to
better assess changes in each of these key elements of the
company's results of operations across different reporting periods
on a consistent basis, independent of certain items as described
below. Thus, each of these non-GAAP financial measures provides
investors with another method to assess the company's operating
results in a manner that is focused on its ongoing, core operating
performance, absent the effects of these items. Management uses
these non-GAAP measures internally to assess the business, its
financial performance, current and historical results, as well as
for strategic decision-making and forecasting future results. Many
of the analysts covering the company also use these non-GAAP
measures in their analyses. Given management's use of these
non-GAAP measures, the company believes these measures are
important to investors in understanding the company's operating
results as seen through the eyes of management. These non-GAAP
measures are not prepared in accordance with GAAP or intended to be
a replacement for GAAP financial data; the non-GAAP measures should
be reviewed together with the GAAP measures and are not intended to
serve as a substitute for results under GAAP, and may be different
from non-GAAP measures used by other companies.
Non-GAAP Adjustments Based on International Financial
Reporting Standards ("IFRS")
The company's non-GAAP results include adjustments to recognize
revenue and profit under IFRS that are consistent with the
adjustments made in connection with the company's reporting process
as part of its status as a consolidated subsidiary of Total S.A., a
foreign public registrant which reports under IFRS.
Differences between GAAP and IFRS reflected in the company's
non-GAAP results are further described below. In these situations,
management believes that IFRS enables investors to better evaluate
the company's revenue and profit generation performance, and
assists in aligning the perspectives of our management and
noncontrolling shareholders with those of Total S.A., our
controlling shareholder.
- Sale-leaseback transactions. The company includes adjustments
related to the revenue recognition on certain sale-leaseback
transactions based on the net proceeds received from the
buyer-lessor. Under GAAP, these transactions are accounted for
under the financing method in accordance with real estate
accounting guidance. Under such guidance, no revenue or profit is
recognized at the inception of the transaction, and the net
proceeds from the buyer-lessor are recorded as a financing
liability. Imputed interest is recorded on the liability equal to
the company's incremental borrowing rate adjusted solely to prevent
negative amortization.
For more information about this non-GAAP financial measure as
well as other non-GAAP financial measures used by the company,
please see the company's Current Report on Form 8-K filed on
November 9, 2016, and the table
captioned "FY 2017 Guidance" set forth at the end of this
release.
FY 2017
GUIDANCE
|
Fiscal
2017
|
Revenue
(GAAP)
|
$1,800,000-$2,300,000
|
Revenue (non-GAAP)
(1)
|
$2,100,000-$2,600,000
|
Estimated non-GAAP amounts above for fiscal 2017 include net
adjustments that increase revenue by approximately $300 million related to sale-leaseback
transactions.
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SOURCE SunPower Corp.