- SunPower has offered its preliminary forecast for Q4/2021, expecting adjusted EBITDA on the lower end of guidance
- California weather and COVID impacts are blamed by the management for pushing $6.5 million residential EBITDA to 2022
- SunPower says it entered 2022 with its largest sales backlog ever with close to 13,000 retrofit customers and New Homes pipeline of 66,000 customers
- A cracking issue for 3rd party connectors supplied to the company is being dealt with, the management stated, for which it expects to recover costs from suppliers in cash
SunPower Corporation has released its preliminary financial forecast for Q4/2021, expecting adjusted EBITDA to fall in at the low end of its guided range of $18 million to $41 million, and continues to expect GAAP revenues of between $361 million to $421 million.
Close to $6.5 million residential EBITDA has been pushed to 2022 due to California weather and impact of COVID, while it invested another $3 million in sales and marketing efforts to expand itself in underpenetrated areas nationally. It counts a 33% increase in the number of households within its serviceable market or 13.3 million incremental single-family homes. SunPower entered 2022 with nearly 13,000 retrofit customers and a New Homes pipeline of 66,000 customers calling it the company’s largest sales backlog in its history.
The company had previously guided for adjusted EBITDA as within $28 million to $46 million, and GAAP revenue of $330 million to $380 million which excluded its Commercial & Industrial Solutions (CIS) and Legacy business (see SunPower’s Q3/2021 Financial Results).
Providing an update regarding its strategic plans to exit the CIS business, the management said it continues to be in advanced discussions to sell the same and may reach an agreement within weeks (see Blue Raven Acquired By SunPower In US).
SunPower also announced it is replacing certain 3rd party connectors within its Light Commercial Value-Added Reseller (CVAR) and CIS systems after it identified a cracking issues in certain factory installed connectors within 3rd party commercial equipment supplied to it.
While there have been no reported safety incidents due to this, it is ‘proactively’ replacing all the connectors to avoid potential longer-term complications and expects to complete the same in 2022. According to Philip Shen of Roth Capital Partners, the company may have to retrofit more than 1,000 sites representing close to 9 MW total capacity in the exercise.
SunPower expects approximately $27 million of supplier-quality related charges in Q4/2021 and approximately $4 million in Q1/2022 as it pursues recovery of costs from the suppliers, in cash.
Jeffrey Osborne of Cowen pointed out, “Our sense is this issue needs to be resolved before the intended sale of the C&I division occurs and likely came up in due diligence. We note ENPH is not a supplier to C&I systems where string inverters are used.”