SunPower Reports Fourth-Quarter and Fiscal Year 2012 Results

SunPower Corp.(NASDAQ: SPWR) announced financial results for its 2012 fourth quarter and fiscal year ended Dec. 30, 2012. 

(1) GAAP revenue excludes $106.1 million and $186.4 million for the fourth quarter of fiscal 2012 and the fourth quarter of fiscal 2011, respectively, and includes $42.3 million for the third quarter of fiscal 2012, in revenue related to the construction of utility power plant projects and construction activities. Similarly, GAAP revenue excludes $204.8 million and $186.4 million for fiscal 2012 and 2011, respectively, related to the construction of utility power plant projects and construction activities. See details in the non-GAAP measure disclosure included in this press release.

(2) GAAP results include approximately $179.3 million, $47.5 million and $93.0 million for the fourth quarter of fiscal 2012, the third quarter of fiscal 2012 and the fourth quarter of fiscal 2011, respectively, in net, pre-tax charges and adjustments excluded from non-GAAP results.  2012 and 2011 GAAP results include $371.3 million and $608.7 million, respectively, in net, pre-tax charges and adjustments excluded from non-GAAP results.

(3) A reconciliation of GAAP to non-GAAP results is included at the end of this press release.

"We exited 2012 with strong fourth-quarter results as we benefitted from our diversified downstream channel strategy, solid execution on our cost roadmap and increased customer demand for our high efficiency, industry leading technology," said Tom Werner, SunPower president and CEO.  "North America remained our most significant market for the quarter as evidenced by our sale of the 579 megawatt (MW) Antelope Valley Solar Projects (AVSP) to MidAmerican Solar, a transaction that further reinforces our strong bankability.  Additionally, the California Valley Solar Ranch (CVSR) project owned by NRG Energy is now more than 75 percent complete and we remain on plan to finish this project by the end of this year.  In residential lease, our fourth-quarter performance was solid and we see significant long-term global growth opportunities in this segment due to our compelling value proposition, low total system costs and downstream footprint.  With our recently announced $100 million residential leasing partnership with U.S. Bancorp, and additional financings currently in process, we are well positioned in the North American residential lease segment for 2013.  In Asia, we expanded our presence in the Japanese rooftop market as a result of our significant partnerships and signed a joint venture in China to manufacture our SunPower C7 Tracker product for power plant projects.  In Europe, industry conditions remain challenging but our cost reduction programs and ability to leverage our existing infrastructure to further evolve our go-to-market strategy with innovative programs will enable us to return to profitability in this region in the second half of 2013. 

"Operationally, we executed well on our accelerated cost reduction roadmap as we beat our blended cost per watt goal for the fourth quarter and fiscal year as overall manufacturing cost declined by more than 25 percent for 2012," continued Werner.  "It was also a year where we extended our technology leadership position with initial production of our 23.5 percent mean efficiency, third-generation Maxeon solar cell, as well as the industry's first 21 percent efficient solar panel.  Customers continue to choose SunPower due to our high efficiency technology, superior energy output and industry leading quality which drives a competitive total system cost across all of our end markets. 

"2012 was a difficult year for the industry and I'm very pleased with our competitive position.   As we look into 2013, we enter the year with a solid foundation to win in the power plant and rooftop segments.  Importantly, with the monetization of our AVSP projects, continued construction of our CVSR installation and further expected gains in our residential business, we now have significant revenue and margin visibility for our business for multiple years.  This visibility, combined with our diversified end market approach, strong technology roadmap, cost reduction initiatives and solid balance sheet, gives us confidence that 2013 will be a much stronger year financially for SunPower," concluded Werner.

Key milestones achieved by the company since the third quarter of 2012 include:

•Sold 579-MW AVSP projects, the largest permitted PV development in the world, to MidAmerican Solar

•Achieved more than 25 percent blended panel cost reduction in 2012  

•Installed more than 180 MW to date for 250-MW CVSR project – 130-MW grid connected

•Signed Chinese SunPower C7 Tracker concentrator joint venture agreement

•Started construction of two projects in South Africa totaling 33-MW

•Record volume to Japan – approximately 15 percent of shipments in the fourth quarter

•Finalized agreement with U.S. Bancorp for $100 million in lease financing capacity

•Residential lease program – 14,200 customers / 114 MW booked to date

"Our fourth quarter results reflect the continued execution of our long-term strategic plan as we exceeded our margin targets for the quarter and significantly strengthened our overall financial position," said Chuck Boynton, SunPower CFO.  "In addition, we successfully managed our working capital during the fourth quarter as we further reduced inventory by $115 million while driving $40 million in free cash flow.  For 2013, we will continue our focus on prudently managing our balance sheet, and firmly believe we can sustainably increase our earnings and free cash flow while building significant shareholder value in our residential leasing program."

Fourth quarter fiscal 2012 GAAP results include pre-tax charges, expenses and adjustments totaling approximately $179.3 million, including a $82.3 million gross margin adjustment related to the timing of revenue recognition from utility power plant projects and construction activities, $39.6 million in restructuring charges related to various restructuring plans put in place to restructure the company's global operations and improve overall operating efficiency, $19.2 million in stock-based compensation, non-cash interest expense and amortization of intangible expenses, $2.8 million related to charges on manufacturing step reduction program, $14.1 million related to a non-recurring impairment of idle equipment, $19.7 million related to settlement in the class action lawsuit and  $1.6 million related to acquisition and integration costs.  These adjustments and charges are excluded from the company's non-GAAP results.  Additionally, fourth-quarter GAAP results exclude an adjustment of approximately $106.1 million in revenue related to GAAP real estate accounting requirements.

First Quarter 2013 Financial Outlook

The company's first quarter 2013 consolidated non-GAAP guidance is as follows: revenue of $475 million to $550 million, gross margin of 18 percent to 22 percent, earnings per diluted share of $0.05 to $0.20, capital expenditures of $30 million to $40 million and MW recognized in the range of 150 MW to 170 MW.  On a GAAP basis, the company expects revenue of $450 million to $525 million, gross margin of 3 percent to 7 percent and loss per diluted share of $0.85 to $0.60.