US Residential Solar Company Lowers 2023 Annual Forecast

• SunPower reported the 2nd consecutive quarter of net loss of -$30 million in Q3/2023 
• It blames lower consumer demand and high interest rates for revenues to have dropped 9% YoY 
• Discussions with Maxeon are going in the positive direction, but the company is now also exploring lower-cost but high-quality panel suppliers 
• GAAP net loss guidance for the year 2023 has been expanded to -$175 million and -$165 million 

SunPower Corporation's Q3/2023 GAAP revenues declined by 9% year-over-year to $432 million while it reported GAAP net loss of -$30 million for yet another quarter. While the management said the company is effectively competing in a difficult market and continues to gain market share, it has cut down its annual guidance for 2023. 

The revenue drop was a result of lower-than-expected consumer demand and delayed revenue recognition from longer cycle times. The company added 18,800 new residential customers against 23,100 added in Q3/2022 (see SunPower Corporation Turns Profitable In Q3/2022). 

It explained, "Although trends improving in Sept/Oct, lower demand in Q3 continued to be driven by higher interest rates and NEM 2.0 pull forward in CA. Higher cancellation rates among NEM 2.0 customers are improving under growing NEM 3.0 bookings." 

Signs of recovery, as CEO Peter Faricy listed, include 163% QoQ increase in battery storage sales for its SunVault product. Its attach rates in California too were reported to have gone up by more than 60% in the SunPower Direct channel, more than 4 times higher than the 1st quarter. 

SunPower is making efforts to expand beyond California having signed builder agreements for the markets of Colorado, Florida, Massachusetts, Nevada, New York, Delaware and Maryland. 

Summarizing the situation the US residential solar power company finds itself in at present, Roth MKM's Philip Shen said, "First, the company is going through a financial restatement process. Second, management continues to work to negotiate the terms and conditions of a consent and waiver to address the effects of the restatement under the January 2023 amended credit agreement. Finally, management's dispute with MAXN remains ongoing. It is unclear when the latter challenges may get resolved." 

Earlier this month, SunPower said it will restate the financial statements for FY 2022, Q1/2023 and Q2/2023 after finding the value of consignment inventory of microinverter components to have been overstated, impacting its revenues for the said period (see SunPower Corporation To Change Financial Statements). 

Regarding the dispute with its spin-off Maxeon Solar Technologies, SunPower told analysts during the Q3 call that it is in discussions with the module manufacturer which have been turning out positive. At the same time, it is looking beyond Maxeon and sold more non-Maxeon panels in Q3 than Maxeon panels.  

Faricy said that in the future, his company will cater to customer demand for high-quality panels that are also affordable. He said, "We're working behind the scenes with a number of different providers." 

Guidance 

For full-year 2023, SunPower has expanded its GAAP net loss guidance range to -$175 million to -$165 million, expanded from -$90 million to -$70 million.  

Adjusted EBITDA will be in the negative now within -$35 million and -$25 million, down from the $55 million to $75 million range forecast previously, which itself was a decline from $125 million to $155 million. 

Customer growth guidance for 2023 has been tightened to between 70,000 and 80,000. The new homes segment is expected to continue to comprise 15% to 20% of total 2023 customers. For the 9M/2023 period, SunPower had added 60,100 new customers. 

The management expects to benefit from customer recognition in 2024 with its backlog of 38,000 new homes. It also pins its hopes on the growing popularity of lease financing, bonus tax credits under the Inflation Reduction Act (IRA) and the company's growing capacity to finance leases in the times to come.