Maxeon Withdraws FY 2024 Guidance After Gross Loss In Q2

Solar PV manufacturer from Singapore, Maxeon Solar Technologies, for whom the US market accounted for over 60% of its Q2 2024 revenues, has lost access to the country. In July 2024, the US Customs and Border Protection (CBP) detained its modules being imported to the country from the company’s Mexico facilities.  

The CBP is assessing the compliance of Maxeon’s Mexico-manufactured modules with the Uyghur Forced Labor Prevention Act (UFLPA). The modules under detention include both Performance Line panels manufactured at its Mexicali fab for utility scale, and IBC panels produced at the Ensenada factory for DG customers.   

In a letter to its shareholders, Maxeon CEO Bill Mulligan shared that even though these detentions are routine, the company has no visibility into the CBP’s process or timing. Hence, it is uncertain when it will be able to restart deliveries to its largest market.  

Additionally, the manufacturer said subdued distributed generation (DG) market demand, project delays, and order cancellations along with unpredictable policy environment impacted its business in Q2 2024.  

Outside of the US, Maxeon said its European and Australian businesses are not without challenges thanks to ‘extreme price pressure due to significant oversupply from the Southeast Asia and China markets.’ 

Owing to all these factors, the management has not provided Q3 2024 guidance even as it expects the revenues to significantly decline sequentially. It has also withdrawn its FY 2024 revenue and adjusted EBITDA guidance.  

Maxeon did not hold the customary earnings call with analysts post Q2 results announcement. These calls will resume once the business has stabilized, it added.  

Q2 2024 financials 

Maxeon shipped 526 MW of solar modules in the reporting quarter. Its revenues stood at $184 million, down from $187 million in the previous quarter, and $348 million in Q2 2023 (see Singapore Company’s Q2/2023 Revenues Grew 46% YoY).    

Utility-scale revenues increased by 12% sequentially to $109 million driven by higher volume shipments to the US customers. DG revenues of $75 million went up by 11% sequentially, driven partly by its efforts to clear inventory of older generation P-series products.  

Even though it achieved profitability in Q2 with a net income of $11.66 million after reporting a net loss of $80 million and $1.5 million quarter-on-quarter (QoQ) and year-on-year (YoY), respectively, the manufacturer suffered a gross loss of $7.78 million.   

Its adjusted EBITDA was in the negative too at -$36.5 million, which narrowed from the previous quarter’s -$38.9 million.  

Market factors and preparedness 

During H2 2024, it foresees CBP detentions leading to lower shipments. A re-imposition of Section 201 bifacial tariffs on solar modules imported into the US from its Mexicali, Mexico fab, and the proposed AD/CVD tariffs on solar cells manufactured in its Malaysia fab also create uncertainty for Maxeon’s business, added the company. 

“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,” explained Mulligan.  

Maxeon stated, “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.”    

China’s TCL TZE has completed its $100 million equity investment in Maxeon to become the controlling shareholder of the company. TZE designated board member Luo Luo Xu has been appointed as the chief transformation officer, who now leads a Strategy and Transformation Office (STO) at Maxeon.  

The STO will develop initiatives focused on improving cost, efficiency and competitiveness to accelerate the manufacturer’s return to profitability. 

Maxeon also announced the departure of CFO Kai Strohbecke who has been replaced by the company’s Senior Vice President and Group Treasurer Ken Olsen as the interim CFO.