SunPower’s Business Suffers With Dip In Demand

• SunPower has lowered its annual guidance for 2023 following net loss of -$30 million in Q2/2023
• It blames the macroeconomic uncertainty and higher interest rates in the market for weakening demand in the residential segment
• To improve operational efficiency till market improves, the management has decided to implement cost cutting measures

Blaming impact to its business from 'macroeconomic uncertainty and higher interest rates', US residential solar bigwig SunPower Corporation has posted another quarter in red, while pulling down annual guidance in preliminary unaudited Q2/2023 results.

Management has also announced cost cutting measures to 'improve operational efficiency' across the board. This includes reducing labor costs.

"Demand in the second quarter has weakened more than expected in the Southeast and Southwest where macroeconomic uncertainty and higher interest rates have slowed our top-of-funnel lead generation and sales bookings," said CEO Peter Faricy.

For the reporting quarter, SunPower expects to report GAAP net loss of -$30 million and adjusted EBITDA of close to -$3 million, even as revenues are reported to go up 11% annually to $464 million. In the previous quarter, the company earned 26% annually with GAAP revenues but reported -$51 million net loss (see SunPower's -$51 Million Net Loss In Q1/2023).

Going forward, the company has lowered its 2023 GAAP net loss guidance to -$90 million to -$70 million, and adjusted EBITDA to now between $55 million to $75 million. Previously it guided for adjusted EBITDA ranging within $125 million to $155 million.

Residential customer growth count has been lowered from 90,000 to 110,000 to now between 70,000 to 90,000 for this year. It has also pulled down guidance of residential adjusted EBITDA/customer to $1,450 to $1,650 to reflect installation costs that are higher than anticipated along with effects of lower market pricing and higher levels of inventory.

This revised guidance, SunPower explained, accurately reflects its assessment of current and near-future customer demand, and mitigating actions to reduce cost structure.

Till last quarter, the company was confident of an 'unprecedented retrofit backlog'. Now it says more than 70% of the projected installations in H2/2023 are already accounted for through the execution of existing backlog. "This includes the expected recognition of all California NEM 2.0 backlog by year-end and stronger than expected New Homes bookings," it added.

SunPower will report its detailed audited financial results for Q2/2023 on August 1, 2023.

SEIA and Wood Mackenzie recently said US residential segment is likely to grow 8% annually in 2023, but there will be a 38% reduction in its largest residential market of California in 2024, leading to a 4% national market contraction (see US: 'Best' 1^st Quarter In PV Industry History).