SunPower Corp. announced financial results for its second quarter ended July 2, 2017.
"Our strong execution enabled us to meet our financial goals for the quarter despite the continued challenging industry conditions," said Tom Werner, SunPower president and CEO. "Our distributed generation business remains a key driver of our performance as demand for our complete solution products in both our residential and commercial segments remains robust. In power plant, we expect to deliver more than 500MW of projects in the second half of this year. We are also seeing growing traction in our global SunPower® Solutions business as we booked or contracted more than 250MW of agreements in the quarter. Operationally, we achieved our cost reduction targets for the quarter. Fab utilization is at 100 percent and we expect to remain fully utilized for the balance of the year. We also continued the successful ramp of our P-Series product in Mexico while starting initial P-Series production at our recently announced Chinese joint venture facility. Finally, we are benefitting from our investments in our next generation cell and module technology as we recently produced our first panels utilizing this technology on our new, leading-edge manufacturing line at our Silicon Valley research facility.
"Strategically, we continue to believe that our restructuring program will enable us to successfully navigate the current market transition while positioning us for improved financial performance. In the near-term, our focus remains on maximizing cash flow through project sales, lower operating expenses, and the potential monetization of non-core assets. In relation to 8point3 Energy Partners, our strategic review process is continuing, but we have received significant initial interest in the acquisition of our general partnership stake or in the sale of the entire partnership. Thus, we have made the decision not to actively seek a replacement partner for First Solar and to focus our efforts on the monetization of our ownership stake in the partnership. In the event we complete a sale of our ownership stake in 8point3, we believe the proceeds will provide us with additional resources to deleverage our balance sheet and retire our 2018 convertible bonds to minimize shareholder dilution and continue to execute on our restructuring plan. Additionally, depending on market conditions, we may have the opportunity to refinance our 2018 convertible bonds as well. We have also recently offered our Boulder Solar 1 project to 8point3 and potentially will offer other Right of First Offer (ROFO) projects to the partnership as well. In the event the partnership waives its rights to acquire these projects, we would sell them to third parties. In either case, we expect the sale of these ROFO projects to generate additional cash proceeds to fund our growth initiatives.
"Looking forward, we will continue to invest in innovative technologies and allocate resources to those areas that offer significant growth opportunities including our next generation cell and module technology, our complete solution product suite, energy storage, digital platforms and Smart Energy strategy, as we believe these initiatives will best position the company for long-term success. Also, our more focused approach to our power plant development activities will allow us to further invest in our leadership position in our distributed generation segments while building continuing momentum in our SunPower Solutions business. We expect these initiatives will improve our competitive position, strengthen our balance sheet and enable us to return to long-term sustained profitability." concluded Werner.
"Our second quarter results reflect our ability to execute on our diversified model in a challenging industry environment while benefitting from our corporate restructuring initiatives," said Chuck Boynton, SunPower chief financial officer. "In the near term, we continue to remain focused on prudently managing our working capital and strengthening our balance sheet. With our decision to monetize our ownership of 8point3 and expected additional non-core asset sales, we anticipate having the resources to retire our 2018 convertible bond while continuing to invest in our strategic initiatives. Given our restructuring, flexible business model and demonstrated continued support from Total, we believe we are well positioned for the future."
Second quarter fiscal 2017 non-GAAP results include net adjustments that, in the aggregate, decreased (increased) non-GAAP net loss by $44.5 million, including $2.5 million related to 8point3 Energy Partners, $2.4 million related to utility and power plant projects, $8.6 million related to stock-based compensation expense, $4.2 million related to amortization of intangible assets, $5.0 million related to restructuring expense, $21.8 million related to cost of above-market polysilicon, $(0.4) million related to other adjustments, and $0.4 million related to tax effect.
The company is updating its fiscal year 2017 revenue and GW deployed guidance. The company now expects revenue of $1.9 billion to $2.1 billion on a GAAP basis and $2.1 billion to $2.3 billion on a non-GAAP basis with GW deployed in the range of 1.3 GW to 1.45 GW. This change is due to project schedule adjustments in Mexico to allow for improved project economics. Additionally, the company now expects lower than forecasted GAAP restructuring charges which will be in the range of $20 million to $60 million for the year. The balance of the company's previously disclosed fiscal year 2017 guidance remains unchanged: non-GAAP operational expenses of less than $350 million and capital expenditures of approximately $120 million. Additionally, the company continues to expect to generate positive operating cash flow through the end of fiscal year 2017 and exit the year with approximately $300 million in cash excluding any proceeds from the potential divestiture of non-core assets. The company is also forecasting positive Adjusted EBITDA for the full year 2017 and continues to believe that cash flow and liquidity remain the key evaluation metrics for investors in the near term.
The company's third quarter fiscal 2017 GAAP guidance is as follows: revenue of $300 million to $350 million, gross margin of negative 3 percent to negative 1 percent and net loss of $120 million to $100 million. Third quarter 2017 GAAP guidance includes the impact of the company's HoldCo asset strategy and revenue and timing deferrals due to real estate accounting as well as the impact of charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $320 million to $370 million, gross margin of 5 percent to 7 percent, Adjusted EBITDA of breakeven to $20 million and megawatts deployed in the range of 405MW to 435MW.
The company expects to deliver more than 500MW of power plant projects in the second half of the year with a significant majority to be recognized in the fourth quarter of 2017.