SunPower Corporation To Change Financial Statements

• SunPower has announced it will restate its financial statements for 2022, and the initial 2 quarters of 2023 
• It cites the value of consignment inventory of microinverter components at certain third-party locations to have been overstated 
• The management is currently negotiating with its lenders the terms and conditions of a consent and waiver to address the effects of the restatement 

Amid the reported slowdown in the distributed generation (DG) deployments, US-based residential PV installer SunPower Corporation has said it will restate the financial statements for financial year 2022, Q1/2023 and Q2/2023. It will be done 'as soon as practicable.'  

According to the management, its preliminary findings indicate the value of consignment inventory of microinverter components at certain third-party locations had been overstated by approximately $16 million to $20 million, leading to the associated revenue being understated.  

The review, it added in a filing with the Securities and Exchange Commission (SEC), is not yet complete and that the financial impact of the errors is preliminary and subject to change.  

Additionally, it found material weakness in its internal control over financial reporting. It admits that the company's disclosure controls and procedures and internal control over financial reporting were not effective for the affected periods. 

In view of this, the management is currently negotiating the terms and conditions of a consent and waiver to address the effects of the restatement under the credit agreement with its lenders. 

Recently, SunPower's manufacturing spin-off Singapore headquartered Maxeon Solar Technologies pulled down its Q3/2023 financial guidance citing breach of payments from its largest US DG customer, which Bloomberg identified as SunPower (see Maxeon Solar Announces Restructuring; Job Cuts To Follow). 

Nonetheless, Philip Shen of analyst firm Roth MKM believes that even though it reflects poorly on the company's internal controls, this is a non-cash issue, hence the financial impact may be relatively minor. Giving it the benefit of doubt, Shen said, "We believe this could be a human error resulting from SPWR switching over to a new accounting system. SPWR addressed this issue during its Q2 call, but then discovered an additional amount beyond what was previously disclosed." 

Roth is of the view that SunPower will resolve any potential issues with its creditors since the latter are more concerned about cash issues. The company is scheduled to announce its Q3/2023 financials on November 1, 2023.