SunPower Inc. Q1 FY2024 earnings call

• Revenue in Q1 was $10 million, half of the prior quarter, due to working capital shortage. - Gross margin was 24%, with a forecast to break 30% in Q2. - Headcount reduced to 109 from 428, and remaining employees were awarded retention stock options. - OpEx decreased to $5.5 million, forecasting $3.6 million for Q2. - Product lines were reorganized into California, rest of US, and Starbucks segments; Starbucks has 42 contracts with 33 outlets upgraded. - Implemented the Rec Auction system for hiring. - Fab operations saw cycle time reduced to 34-40 days from 112 days.

Q1 revenue was $10 million, half of the prior quarter. Gross margin was 24%. Headcount decreased to 109 from 428. OpEx was $5.5 million, with a forecast of $3.6 million for Q2. Revenue dropped due to a working capital shortage, as the company couldn't buy panels to generate revenue despite having a $17.8 million backlog.

• Forecast to break 30% gross margin in Q2. - Need to raise money and pursue M&A. - Breakeven revenue around $16.6 million with certain assumptions (e.g., 31% commission, 47% gross margin). - Aim to get gross margin into the 40% range within a couple of quarters.

• Working capital crunch due to unresolved loan situation with Carlyle. - Unresolved debt covenants with private equity firms. - Structural and government issues affecting solar retail pricing, including utility rate regulations and market competition issues.

Q: In the event that Carlyle is refusing to convert their debt, what is the most logical way for the company to solve the working capital from and returns to $100 million annual run rate?

A: A debt-to-equity swap is needed, or working with Carlyle as they are a large company with solar holdings.

Q: Under the assumption that the debt to equity swap with Carlyle complete soon, what would be the approximate breakeven revenue?

A: Breakeven revenue around $16.6 million with 31% commission and 47% gross margin, with potential to be lower with improved order creation and cost management.

Q: Can you talk about the cadence of OpEx from here? Should we continue to expect OpEx from $3.6 million per quarter?

A: Projecting $3.6 million for Q2, aiming to get OpEx under $3 million to reach breakeven.

Q: Do you see a reverse split coming up to staying compliant?

A: No immediate plan for a reverse split; aim to earn back above the dollar threshold.

Q: What do you expect the cash generating or the free cash flow to be looking at the point of 1000 jobs?

A: Not specified explicitly, need to calculate after the company survives and stabilizes.

Q: Can you discuss the current retail economics for solar customers, i.e. the value proposition for our customers as well as the availability for pioneer to those sub-owners?

A: Utility rates are increasing, solar beats retail cost, battery-based systems for time shifting are a value proposition, with collaboration with Enphase for battery solutions.