PR Newswire | Aug 3, 2021 04:06PM EDT

08/03 15:05 CDT

SunPower Reports Second Quarter 2021 Results- Met Net Income and Adjusted EBITDA guidance; Strong residential margin growth- Expected $15 billion TAM expansion through Wallbox partnership- Materially delevered balance sheet ahead of 2021 plan SAN JOSE, Calif., Aug. 3, 2021

SAN JOSE, Calif., Aug. 3, 2021 /PRNewswire/ -- SunPower Corp. (NASDAQ:SPWR), a leading solar technology and energy services provider, today announced financial results for its second quarter ended July 4, 2021.

"Consumer demand for better, more resilient energy is increasing and with more than 100 million homes in the U.S. that could benefit from solar and storage, we see a significant opportunity to meet that demand," said Peter Faricy, CEO of SunPower. "To lead in customer adoption and growth we are focused on delivering world class customer experiences and continuing to invest in strategic priorities that will make solar easy, reliable and affordable. We believe this long-term strategic approach will position SunPower as a leader as the market continues to expand."

"Our solid second quarter results reflect continued execution in both our residential and commercial businesses as year over year megawatts grew 40 percent and we doubled our gross margin per watt," said Faricy. "We also made material progress on a number of our key initiatives to expand our addressable market during the quarter including increasing our dealer footprint, expanding our financial platform to include loan servicing as well as announcing our strategic alliance with leading EV solutions provider Wallbox. This alliance will enable us to offer our residential customers a simple and cost effective integrated solar, storage and EV solution that will lower overall energy costs while reducing strain on the grid. Looking forward, we remain on track to achieve our 2021 financial outlook and are well positioned to drive growth and profitability in 2022 and beyond."

Residential and Light Commercial (RLC)

* Residential strength - 23 percent gross margin, up 160 basis points sequentially, $28 million Adjusted EBITDA * Added 13,000 customers - residential bookings up 16 percent sequentially, 67 percent year-over-year (YoY) * Continued progress in converting residential mix to more full systems sales (>55 percent in Q221) * EV business alliance with Wallbox expected to expand addressable market by $15 billion

Commercial and Industrial Solutions (CIS)

* YoY megawatts (MW) growth of ~30 percent, 1 gigawatt installed base, backlog above 260MW * Strong bookings momentum - up more than 20 percent YoY * Helix storage - >20 MWh Front of the Meter (FTM) storage under contract, >500 MWh pipeline * Continued momentum in community solar - more than 150 MW of pipeline, added >35 MW in Q221

($ Millions, except percentages and per-share data)2nd Quarter 20211st Quarter 20212nd Quarter 2020

GAAP revenue $308.9 $306.4 $217.7

GAAP gross margin from continuing operations 19.8% 16.3% 11.8%

GAAP net income (loss) from continuing operations $75.2 $(48.4) $55.9

GAAP net income (loss) from continuing operations $0.40 $(0.28) $0.31 per diluted share

Non-GAAP revenue^1 $308.9 $305.8 $217.7

Non-GAAP gross margin^1 20.6% 18.7% 12.6%

Non-GAAP net income (loss)^1 $10.4 $9.3 $(17.2)

Non-GAAP net income (loss) from continuing $0.06 $0.05 $(0.10) operations per diluted share^1

Adjusted EBITDA^1 $22.2 $19.1 $(4.3)

MW Recognized 125 127 91

Cash^2 $140.5 $213.1 $235.3

Information presented for 2^nd quarter 2020 above is for continuing operationsonly, and excludes results of Maxeon, other than Cash.

^1Information about SunPower's use of non-GAAP financial information, includinga reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP FinancialMeasures" below

^2Includes cash and cash equivalents, excluding restricted cash

RLCThe company continued to see strength in its RLC segment during the second quarter, driven primarily by its residential and new homes businesses as MW recognized for those businesses rose more than 50 percent YoY. SunPower added 13,000 new customers during the quarter, bringing its total residential install base to more than 376,000. Additionally, it grew its single and multi-family new homes backlog by 10 percent sequentially to more than 220 MW. Demand also remains high for the company's SunVault(tm) residential storage solution with strong bookings momentum continuing in the second quarter and attach rates of 23 percent in its direct sales channel. The company expects SunVault growth to accelerate in the second half of the year given that lead times have returned to normal as well the successful relaunch of SunVault with its growing dealer base starting in June.

Residential gross margin for the quarter was 23 percent, up 160 basis points sequentially and more than 600 basis points YoY. The increase was primarily driven by a lower cost of capital, supply chain initiatives and the continuing conversion in mix from component sales to higher margin full system sales which totaled more than 55 percent of residential installations for the quarter.

CISThe company's CIS second quarter performance reflected solid execution as MW recognized rose approximately 30 percent YoY bringing its total installed base to 1 gigawatt. CIS also maintained its leading market share during the quarter as it increased its backlog by 20 percent YoY and finalized an agreement with California Resources Corporation to develop up to 45MW of Behind-the-Meter (BTM) solar projects. Demand for its Helix(r) BTM storage solution remained high as the company now has more than 35MWh installed and a pipeline in excess of 230MWh.

Additionally, the company is seeing continued success in its FTM storage initiatives with more than 20 MWh currently under contract and a pipeline of greater than 500 MWh. The company continues to make progress on its community solar initiatives as its pipeline is now more than 150MW. Given this success, SunPower believes that its CIS business is well positioned to capitalize on the increased demand for its commercial storage and services offerings as customers continue to look for solutions to address their resiliency and cost savings needs.

Consolidated Financials"Overall, we were pleased with our execution for the quarter as we saw sequential improvement in both gross margin and Adjusted EBITDA," said Manavendra Sial, chief financial officer at SunPower. "We generated positive cash flow at the business unit level as well as further improved our balance sheet with retirement of our outstanding 2021 convertible notes in June. Finally, we continued to make progress on our goal to lower our cost of capital to 5.5 percent while continuing to invest in our digital and product initiatives to reduce our customer acquisition costs. Given our second quarter success confidence in our supply chain and execution on our strategic priorities, we remain confident in our ability to capitalize on our growth opportunities."

Second quarter of fiscal year 2021 non-GAAP results exclude net adjustments that, in the aggregate, increased GAAP income by $65 million, resulting from $84 million related to a mark-to-market gain on equity investments, $1 million gain on sale and impairment of residential lease assets. This was partially offset by $2 million related to results of operations of legacy business exited, $10 million related to stock-based compensation expense, $4 million related to litigation costs, $1 million related to restructuring charges, $1 million related to business reorganization costs, and $2 million for income taxes and other non-recurring items.

Financial OutlookFor the third quarter, the company expects sequential volume and margin improvements in its residential business with volume expected to grow more than 40 percent versus the prior year.

Specifically, the company expects third quarter GAAP revenue of $325 to $375 million, GAAP net loss of $10 to $0 million and MW recognized of 125 MW to 150 MW. Third quarter Adjusted EBITDA will be in the range of $21 to $31 million as linearity has significantly improved compared to the previous two years.

For fiscal year 2021, the company expects GAAP revenue of $1.41 to $1.49 billion, GAAP net income of $40 to $60 million and MW recognized of 540 MW to 610 MW. Residential MW recognized are expected to be in the range of 340MW to 380MW.

For fiscal year 2021, the company's full year Adjusted EBITDA guidance remains unchanged at $110 to $130 million inclusive of up to $10 million incremental spend on customer experience and digital initiatives that will further accelerate the growth of SunPower's residential business in 2022 and beyond. Third quarter and total year 2021 MW recognized and revenue guidance includes the impact of CIS project timing and increasing investment in new residential growth initiatives compared to its light commercial business.

The company will host a conference call for investors this afternoon to discuss its second quarter 2021 performance at 1:30 p.m. Pacific Time. The call will be webcast and can be accessed from SunPower's website at http://investors.sunpower.com/events.cfm.

This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent categories in the financial attachment of this press release. Please note that the company has posted supplemental information and slides related to its second quarter 2021 performance on the Events and Presentations section of SunPower's Investor Relations page at http://investors.sunpower.com/events.cfm.

About SunPowerHeadquartered in?California's?Silicon Valley, SunPower (NASDAQ:SPWR) is a leading Distributed Generation Storage and Energy Services provider in?North America. SunPower offers the only solar + storage solution designed and warranted by one company that gives customers control over electricity consumption and resiliency during power outages while providing cost savings to homeowners, businesses, governments, schools and utilities. For more information, visit www.sunpower.com.

Forward-Looking StatementsThis press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) our plans and expectations regarding strategic partnerships and initiatives, including our relationship with Wallbox, and the anticipated impacts thereof on our business and financial results, as well as on total addressable market, customer relationships, cost savings, and strain on the grid; (b) our expectations regarding our industry and market factors, including consumer demand and expectations, market opportunity, and our positioning and ability to meet anticipated demand and deliver on our objectives; (c) areas of investment, both current and future, and anticipated impacts on our business and financial results; (d) our strategic plans and expectations for the results thereof; (e) our expectations regarding achievement of our 2021 goals and projected growth and profitability in 2022 and beyond, and our positioning for future success; (f) expectations regarding our future performance based on bookings, backlog, and pipelines in our sales channels and for our products; (g) our plans and expectations for our products and solutions, including ramps and timing, anticipated demand and growth, and impacts on our market position and our ability to meet our targets and goals; (h) the anticipated future success of our growth initiatives, and our positioning to capitalize on the increased demand for commercial storage and services offerings; (i) areas of investment, both current and future, and anticipated impacts on our business and financial results; (j) plans for initiatives to lower our cost of capital, expand our addressable market, and continue to invest in growth areas, and anticipated impacts on our business and financial results; (k) expected sequential margin growth and improvements in our residential business, including expected volume growth; (l) our third quarter fiscal 2021 guidance, including GAAP revenue, net loss, MW recognized, and Adjusted EBITDA, and related assumptions; and (m) our expectations for fiscal 2021, including GAAP revenue, net income, MW recognized and residential MW recognized and related assumptions.

These forward-looking statements are based on our current assumptions, expectations and beliefs and involve substantial risks and uncertainties that may cause results, performance or achievement to materially differ from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: (1) potential disruptions to our operations and supply chain that may result from epidemics or natural disasters, including impacts of the Covid-19 pandemic, and other factors; (2) competition in the solar and general energy industry and downward pressure on selling prices and wholesale energy pricing; (3) regulatory changes and the availability of economic incentives promoting use of solar energy; (4) risks related to the introduction of new or enhanced products, including potential technical challenges, lead times, and our ability to match supply with demand while maintaining quality, sales, and support standards; (5) changes in public policy, including the imposition and applicability of tariffs; (6) our dependence on sole- or limited-source supply relationships, including our exclusive supply relationship with Maxeon Solar Technologies; (7) the success of our ongoing research and development efforts and our ability to commercialize new products and services, including products and services developed through strategic partnerships; (8) our liquidity, indebtedness, and ability to obtain additional financing for our projects and customers; (9) challenges managing our acquisitions, joint ventures, and partnerships, including our ability to successfully manage acquired assets and supplier relationships. A detailed discussion of these factors and other risks that affect our business is included in filings we make with the Securities and Exchange Commission (SEC) from time to time, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or on the SEC Filings section of our Investor Relations website at investors.sunpower.com. All forward-looking statements in this press release are based on information currently available to us, and we assume no obligation to update these forward-looking statements in light of new information or future events.

(c)2021 SunPower Corporation. All rights reserved. SUNPOWER, the SUNPOWER logo, HELIX, and SUNVAULT, are trademarks or registered trademarks of SunPower Corporation in the U.S.

SUNPOWER CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

July 4, 2021 January 3, 2021

Assets

Current assets:

Cash and cash equivalents $ 140,462 $ 232,765

Restricted cash and cash equivalents, current 5,818 5,518portion

Short-term investments 372,820 -

Accounts receivable, net 110,450 108,864

Contract assets 89,219 114,506

Inventories 235,843 210,582

Advances to suppliers, current portion 4,995 2,814

Project assets - plants and land, current portion 12,850 21,015

Prepaid expenses and other current assets 88,890 94,251

Total current assets 1,061,347 790,315

Restricted cash and cash equivalents, net of 5,347 8,521current portion

Property, plant and equipment, net 32,507 46,766

Operating lease right-of-use assets 55,893 54,070

Solar power systems leased, net 47,385 50,401

Other long-term assets 344,153 696,409

Total assets $ 1,546,632 $ 1,646,482

Liabilities and Equity

Current liabilities:

Accounts payable $ 158,631 $ 166,066

Accrued liabilities 97,134 121,915

Operating lease liabilities, current portion 12,969 9,736

Contract liabilities, current portion 65,425 72,424

Short-term debt 74,071 97,059

Convertible debt, current portion - 62,531

Total current liabilities 408,230 529,731

Long-term debt 58,224 56,447

Convertible debt, net of current portion 423,059 422,443

Operating lease liabilities, net of current portion 35,230 43,608

Contract liabilities, net of current portion 28,283 30,170

Other long-term liabilities 149,593 157,597

Total liabilities 1,102,619 1,239,996

Equity:

Preferred stock - -

Common stock 172 170

Additional paid-in capital 2,703,647 2,685,920

Accumulated deficit (2,058,032) (2,085,246)

Accumulated other comprehensive income 9,389 8,799

Treasury stock, at cost (211,931) (205,476)

Total stockholders' equity 443,245 404,167

Noncontrolling interests in subsidiaries 768 2,319

Total equity 444,013 406,486

Total liabilities and equity $ 1,546,632 $ 1,646,482

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

Revenues:

Solar power systems, components, and other $ 303,408 $ 301,237 $ 212,408 $ 604,645 $ 497,697

Residential leasing 1,354 1,120 1,329 2,474 2,653

Solar services 4,165 4,041 3,930 8,206 7,863

Total revenues 308,927 306,398 217,667 615,325 508,213

Cost of revenues:

Solar power systems, components, and other 246,053 254,104 189,868 500,157 448,505

Residential leasing 678 601 1,217 1,279 2,513

Solar services 1,165 1,819 930 2,984 2,359

Total cost of revenues 247,896 256,524 192,015 504,420 453,377

Gross profit 61,031 49,874 25,652 110,905 54,836

Operating expenses:

Research and development 4,711 5,015 5,994 9,726 13,762

Sales, general, and administrative 56,730 47,744 36,014 104,474 76,731

Restructuring charges 808 3,766 1,259 4,574 2,835

(Gain) loss on sale and impairment of (68) (226) 141 (294) (133)residential lease assets

Gain on business divestitures, net (224) - (10,458) (224) (10,458)

Income from transition services agreement, (1,656) (3,087) - (4,743) -net

Total operating expenses 60,301 53,212 32,950 113,513 82,737

Operating income (loss) 730 (3,338) (7,298) (2,608) (27,901)

Other income (expense), net:

Interest income 114 52 174 166 578

Interest expense (7,721) (7,965) (8,448) (15,686) (17,641)

Other, net 84,071 (43,471) 71,205 40,600 121,643

Other income (expense), net 76,464 (51,384) 62,931 25,080 104,580

Income (loss) before income taxes andequity in earnings of unconsolidated 77,194 (54,722) 55,633 22,472 76,679investees

(Provision for) benefit from income taxes (2,425) 5,224 (1,106) 2,799 (1,991)

Net income (loss) from continuing 74,769 (49,498) 54,527 25,271 74,688operations

Loss from discontinued operations beforeincome taxes and equity in losses of - - (33,278) - (54,838)unconsolidated investees

Provision for income taxes - - (1,962) - (2,946)

Equity in earnings of unconsolidated - - (889) - (644)investees

Net loss from discontinued operations, net - - (36,129) - (58,428)of taxes

Net income (loss) 74,769 (49,498) 18,398 25,271 16,260

Net loss from continuing operations 438 1,113 1,363 1,551 2,742attributable to noncontrolling interests

Net income from discontinued operations - - (383) - (1,055)attributable to noncontrolling interests

Net loss attributable to noncontrolling 438 1,113 980 1,551 1,687interests

Net income (loss) from continuing 75,207 (48,385) 55,890 26,822 77,430operations attributable to stockholders

Net loss from discontinued operations - - (36,512) - (59,483)attributable to stockholders

Net income (loss) attributable to $ 75,207 $ (48,385) $ 19,378 $ 26,822 $ 17,947stockholders

Net income (loss) per share attributableto stockholders - basic:

Continuing operations $ 0.44 $ (0.28) $ 0.33 $ 0.16 $ 0.46

Discontinued operations $ - $ - $ (0.21) $ - $ (0.35)

Net income (loss) per share - basic $ 0.44 $ (0.28) $ 0.12 $ 0.16 $ 0.11

Net income (loss) per share attributableto stockholders - diluted:

Continuing operations $ 0.40 $ (0.28) $ 0.31 $ 0.15 $ 0.44

Discontinued operations $ - $ - $ (0.19) $ - $ (0.33)

Net income (loss) per share - diluted $ 0.40 $ (0.28) $ 0.12 $ 0.15 $ 0.11

Weighted-average shares:

Basic 172,640 171,200 170,003 171,920 169,413

Diluted 194,363 171,200 192,040 176,794 179,174

SUNPOWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

Cash flows from operating activities:

Net income (loss) $ 74,769 $ (49,498) $ 18,398 $ 25,271 $ 16,260

Adjustments to reconcile net income(loss) to net cash used in operatingactivities:

Depreciation and amortization 2,968 2,849 16,918 5,817 33,810

Stock-based compensation 9,613 5,437 5,879 15,050 12,746

Non-cash interest expense 1,650 1,505 1,838 3,155 3,748

Equity in losses of unconsolidated - - 889 - 644investees

(Gain) loss on equity investments (83,746) 44,730 (71,062) (39,016) (120,214)

Gain on retirement of convertible debt - - - - (2,956)

Gain on business divestitures, net (224) - (10,458) (224) (10,458)

Gain on sale of investments - (1,162) - (1,162) -

Deferred income taxes 2,264 (3,901) 1,381 (1,637) 1,032

Other, net (935) (5,280) 1,466 (6,215) 3,995

Changes in operating assets andliabilities:

Accounts receivable (7,023) 4,114 79,029 (2,909) 58,909

Contract assets 24,011 487 (3,164) 24,498 (2,869)

Inventories 10,096 (8,271) 36,336 1,825 (6,725)

Project assets (2,892) 9,197 (3,024) 6,305 (11,905)

Prepaid expenses and other assets 3,751 1,429 9,403 5,180 28,038

Operating lease right-of-use assets 3,490 2,875 4,863 6,365 7,786

Advances to suppliers 568 (3,852) 3,093 (3,284) 12,029

Accounts payable and other accrued (18,077) (24,152) (33,637) (42,229) (126,236)liabilities

Contract liabilities 4,907 (13,461) (34,324) (8,554) (50,454)

Operating lease liabilities (3,160) (3,429) (3,173) (6,589) (6,022)

Net cash provided by (used in) 22,030 (40,383) 20,651 (18,353) (158,842)operating activities

Cash flows from investing activities:

Purchases of property, plant and (4,930) (1,964) (4,592) (6,894) (10,805)equipment

Proceeds from sale of property, plant 900 - - 900 -and equipment

Cash paid for solar power systems - (635) (2,037) (635) (2,647)

Proceeds from business divestitures, 10,516 - 15,417 10,516 15,417net of de-consolidated cash

Proceeds from return of capital from 2,276 - 7,724 2,276 53,873equity investments

Cash received from sale of investments - 1,200 - 1,200 -

Net cash provided by (used in) 8,762 (1,399) 16,512 7,363 55,838investing activities

Cash flows from financing activities:

Proceeds from bank loans and other debt 24,073 71,323 44,954 95,396 121,498

Repayment of bank loans and other debt (68,497) (35,076) (53,605) (103,573) (119,335)

Proceeds from issuance of non-recourseresidential and commercial financing, - - 890 - 10,644net of issuance costs

Repayment of non-recourse residential (85) (9,713) - (9,798) -and commercial financing debt

Repayment of convertible debt (62,757) - - (62,757) (87,141)

Receipt of contingent asset of a prior - - 1,811 - 2,234business combination

Issuance of common stock to executive 2,998 - - 2,998 -

Equity offering costs paid - - - - (928)

Purchases of stock for tax withholding (4,335) (2,118) (1,467) (6,453) (8,381)obligations on vested restricted stock

Net cash (used in) provided by (108,603) 24,416 (7,417) (84,187) (81,409)financing activities

Effect of exchange rate changes oncash, cash equivalents, and restricted - - 330 - 114cash

Net (decrease) increase in cash, cash (77,810) (17,367) 30,076 (95,177) (184,299)equivalents, and restricted cash

Cash, cash equivalents and restricted 229,437 246,804 244,282 246,804 458,657cash, Beginning of period

Cash, cash equivalents, and restricted $ 151,627 $ 229,437 $ 274,358 $ 151,627 $ 274,358cash, End of period

Reconciliation of cash, cashequivalents, and restricted cash to theunaudited condensed consolidatedbalance sheets:

Cash and cash equivalents $ 140,462 $ 213,105 $ 235,307 $ 140,462 $ 235,307

Restricted cash and cash equivalents, 5,818 10,928 30,631 5,818 30,631current portion

Restricted cash and cash equivalents, 5,347 5,404 8,420 5,347 8,420net of current portion

Total cash, cash equivalents, and $ 151,627 $ 229,437 $ 274,358 $ 151,627 $ 274,358restricted cash

Supplemental disclosure of cash flowinformation:

Costs of solar power systems funded by $ - $ - $ 532 $ - $ 1,716liabilities

Property, plant and equipment (473) 1,647 3,067 1,174 5,452acquisitions funded by liabilities

Accounts payable balances reclassified - - 18,933 - 23,933to short-term debt

Right-of-use assets obtained in - 11,528 963 11,528 13,424exchange of lease obligations

Deconsolidation of right-of-use assets 3,340 - - 3,340 -and lease obligations

Debt repaid in sale of commercial 5,585 - - 5,585 -projects

Assumption of liabilities in connection - - 9,085 - 9,085with business divestitures

Holdbacks in connection with business - - 7,199 - 7,199divestitures

Cash paid for interest 2,090 11,437 5,200 13,527 16,523

Cash paid for income taxes 20,144 89 9,599 20,233 11,701

Use of Non-GAAP Financial Measures

To supplement its consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), the company uses non-GAAP measures that are adjusted for certain items from the most directly comparable GAAP measures. The specific non-GAAP measures listed below are: revenue; gross margin; net loss; net loss per diluted share; and adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). Management believes that each of these non-GAAP measures are useful to investors, enabling them to better assess changes in each of these key elements of the company's results of operations across different reporting periods on a consistent basis, independent of certain items as described below. Thus, each of these non-GAAP financial measures provide investors with another method to assess the company's operating results in a manner that is focused on its ongoing, core operating performance, absent the effects of these items. Management uses these non-GAAP measures internally to assess the business, its financial performance, current and historical results, as well as for strategic decision-making and forecasting future results. Many of the analysts covering the company also use these non-GAAP measures in their analysis. Given management's use of these non-GAAP measures, the company believes these measures are important to investors in understanding the company's operating results as seen through the eyes of management. These non-GAAP measures are not prepared in accordance with GAAP or intended to be a replacement for GAAP financial data; and therefore, should be reviewed together with the GAAP measures and are not intended to serve as a substitute for results under GAAP, and may be different from non-GAAP measures used by other companies.

Non-GAAP gross margin includes adjustments relating to gain/loss on sale and impairment of residential lease assets, litigation, stock-based compensation, and amortization of intangible assets, each of which is described below. In addition to the above adjustments, non-GAAP net loss and non-GAAP net loss per diluted share are adjusted for adjustments relating to mark to market gain on equity investments, gain on business divestitures, impairment of property, plant, and equipment, transaction-related costs, non-cash interest expense, restructuring charges (credits), gain on convertible debt repurchased, tax effect of these non-GAAP adjustments, each of which is described below. In addition to the above adjustments, Adjusted EBITDA includes adjustments relating to cash interest expense (net of interest income), provision for income taxes, and depreciation.

Non-GAAP Adjustments Based on International Financial Reporting Standards ("IFRS")

The company's non-GAAP results include adjustments under IFRS that are consistent with the adjustments made in connection with the company's internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE, our controlling shareholder and a foreign public registrant that reports under IFRS. Differences between GAAP and IFRS reflected in the company's non-GAAP results are further described below. In these situations, management believes that IFRS enables investors to better evaluate the company's performance, and assists in aligning the perspectives of the management with those of TotalEnergies SE.

* Mark-to-market loss (gain) in equity investments: We recognize adjustments related to the fair value of equity investments with readily determinable fair value based on the changes in the stock price of these equity investments at every reporting period. Under U.S. GAAP, mark-to-market gains and losses due to changes in stock prices for these securities are recorded in earnings while under IFRS, an election can be made to recognize such gains and losses in other comprehensive income. Such an election was made by TotalEnergies SE. Further, we elected the Fair Value Option ("FVO") for some of our equity method investments, and we adjust the carrying value of those investments based on their fair market value calculated periodically. Such option is not available under IFRS, and equity method accounting is required for those investments. We believe that excluding these adjustments on equity investments is consistent with our internal reporting process as part of its status as a consolidated subsidiary of TotalEnergies SE. and better reflects our ongoing results.

Other Non-GAAP Adjustments

* Results of operations of legacy business to be exited: Following the announcement of closure of our Hillsboro, Oregon facility in the first fiscal quarter of 2021, we prospectively exclude its results of operations from Non-GAAP results given that revenue will cease starting first fiscal quarter of 2021 and all subsequent activities are focused on the wind down of operations. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results. * Loss/Gain on sale and impairment of residential lease assets: In fiscal 2018 and 2019, in an effort to sell all the residential lease assets owned by us, we sold membership units representing a 49% membership interest in majority of its residential lease business and retained a 51% membership interest. We record an impairment charge based on the expected fair value for a portion of residential lease assets portfolio that was retained. Any charges or credits on these remaining unsold residential lease assets impairment, as well as its corresponding depreciation savings, are excluded from our non-GAAP results as they are not reflective of ongoing operating results. * Stock-based compensation: Stock-based compensation relates primarily to our equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. We believe that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including compared with the performance of other companies, without the period-to-period variability created by stock-based compensation. * Amortization of intangible assets: We incur amortization of intangible assets as a result of acquisitions, which includes patents, purchased technology, project pipeline assets, and in-process research and development. We believe that it is appropriate to exclude these amortization charges from the company's non-GAAP financial measures, as they are not reflective of ongoing operating results. * Litigation: We may be involved in various instances of litigation, claims and proceedings that result in payments or recoveries. We exclude gains or losses associated with such events because the gains or losses do not reflect our underlying financial results in the period incurred. We also exclude all expenses pertaining to litigation relating to businesses that discontinued as a result of spin-off of Maxeon Solar, for which we are indemnifying them. We believe that it is appropriate to exclude such charges from our non-GAAP results as they are not reflective of ongoing operating results. * Transaction-related costs: In connection with material transactions such as acquisition or divestiture of a business, the company incurred transaction costs including legal and accounting fees. We believe that it is appropriate to exclude these costs from our segment results as they would not have otherwise been incurred as part of the business operations and therefore is not reflective of ongoing operating results. * Gain on business divestiture: In the second quarter of fiscal 2021, we sold a portion of our residential lease business and certain commercial projects. We recognized a gain and a loss relating to these business divestitures, respectively. We believe that it is appropriate to exclude such gain and loss from the company's non-GAAP financial measures as it is not reflective of ongoing operating results. * Executive transition costs: We incur non-recurring charges related to the hiring and transition of new executive officers. We recently appointed a new chief executive officer and chief legal officer, and are investing resources in those executive transitions, and in developing new members of management as we complete our restructuring transformation. We believe that it is appropriate to exclude these from our non-GAAP results as they are not reflective of ongoing operating results. * Business reorganization costs: In connection with the spin-off of Maxeon into an independent, publicly traded company, we incurred and expect to continue to incur in upcoming quarters, non-recurring charges on third-party legal and consulting expenses, primarily to enable in separation of shared information technology systems and applications. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results. * Restructuring charges (credits): We incur restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company's global strategy and improving its overall operating efficiency and cost structure. Although the company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results. * Tax effect: This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. Our non-GAAP tax amount is based on estimated cash tax expense and reserves. We forecast our annual cash tax liability and allocates the tax to each quarter in a manner generally consistent with its GAAP methodology. This approach is designed to enhance investors' ability to understand the impact of our tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense, or tax impact of non-recurring items. * Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in addition to adjustments described above, we exclude the impact of the following items during the period: * Cash interest expense, net of interest income * Provision for income taxes * Depreciation

For more information about these non-GAAP financial measures, please see the tables captioned "Reconciliations of GAAP Measures to Non-GAAP Measures" set forth at the end of this release, which should be read together with the preceding financial statements prepared in accordance with GAAP.

SUNPOWER CORPORATION

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except percentages and per share data)

(Unaudited)

Adjustments to Revenue:

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

GAAP revenue $ 308,927 $ 306,398 $ 217,667 $ 615,325 $ 508,213

Adjustments based on IFRS:

Legacy utility and power plant - - - - (207)projects

Other adjustments:

Results of operations of legacy (4) (621) - (625) -business to be exited

Construction revenue on solar - - - - 5,392services contracts

Non-GAAP revenue $ 308,923 $ 305,777 $ 217,667 $ 614,700 $ 513,398

Adjustments to Gross Profit Margin:

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

GAAP gross profit from continuing $ 61,031 $ 49,874 $ 25,652 $ 110,905 $ 54,836operations

Adjustments based on IFRS:

Legacy utility and power plant - - - - (34)projects

Legacy sale-leaseback transactions - - - - 20

Other adjustments:

Results of operations of legacy 2,031 7,066 - 9,097 -business to be exited

Construction revenue on solar - - - - 4,735service contracts

Gain on sale and impairment of (519) (494) (458) (1,013) (906)residential lease assets

Stock-based compensation expense 1,069 887 471 1,956 1,030

Amortization of intangible assets - - 1,784 - 3,568

Non-GAAP gross profit $ 63,612 $ 57,333 $ 27,449 $ 120,945 $ 63,249

GAAP gross margin (%) 19.8 % 16.3 % 11.8 % 18.0 % 10.8 %

Non-GAAP gross margin (%) 20.6 % 18.7 % 12.6 % 19.7 % 12.3 %

Adjustments to Net Income (Loss):

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

GAAP net income (loss) fromcontinuing operations attributable $ 75,207 $ (48,385) 55,890 $ 26,822 $ 77,430to stockholders

Adjustments based on IFRS:

Legacy utility and power plant - - - - (34)projects

Legacy sale-leaseback transactions - - - - 20

Mark-to-market (gain) loss on equity (83,746) 44,730 (71,060) (39,016) (118,931)investments

Other adjustments:

Results of operations of legacy 2,031 7,066 - 9,097 -business to be exited

Construction revenue on solar - - - - 4,735service contracts

Gain on sale and impairment of (587) (5,383) (317) (5,970) (1,039)residential lease assets

Litigation 3,493 5,210 - 8,703 485

Stock-based compensation expense 10,037 5,013 3,955 15,050 8,933

Amortization of intangible assets - - 1,784 - 3,570

Gain on business divestitures, net (224) - (10,529) (224) (10,529)

Transaction-related costs 225 130 1,382 355 1,863

Executive transition costs 502 - - 502 -

Business reorganization costs 904 954 - 1,858 -

Restructuring charges 808 3,766 659 4,574 2,235

Gain on convertible debt repurchased - - - - (2,956)

Tax effect 1,772 (3,839) 994 (2,067) 1,846

Non-GAAP net income (loss) $ 10,422 $ 9,262 $ (17,242) $ 19,684 $ (32,372)attributable to stockholders

Adjustments to Net Income (loss) per diluted share:

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

Net income (loss) per diluted share

Numerator:

GAAP net income (loss) available to $ 75,207 $ (48,385) $ 55,890 $ 26,822 $ 77,430common stockholders^1

Add: Interest expense on 4.00% 3,126 - 3,358 - -debenture due 2023, net of tax

Add: Interest expense on 0.875% 67 - 535 168 1,040debenture due 2021, net of tax

GAAP net income (loss) available to $ 78,400 $ (48,385) $ 59,783 $ 26,990 $ 78,470common stockholders^1

Non-GAAP net income (loss) available $ 10,422 $ 9,262 $ (17,242) $ 19,684 $ (32,372)to common stockholders^1

Denominator:

GAAP weighted-average shares 172,640 171,200 170,003 171,920 169,413

Effect of dilutive securities:

Restricted stock units 3,084 - 1,765 3,299 1,558

0.875% debentures due 2021 1,571 - 6,350 1,575 8,203

4.00% debentures due 2023 17,068 - 13,922 - -

GAAP dilutive weighted-average 194,363 171,200 192,040 176,794 179,174common shares:

Non-GAAP weighted-average shares 172,640 171,200 170,003 171,920 169,413

Effect of dilutive securities:

Restricted stock units 3,084 4,113 - 3,299 -

4.00% debentures due 2023 - 17,068 - - -

Non-GAAP dilutive weighted-average 175,724 192,381 170,003 175,219 169,413common shares^1

GAAP dilutive net income (loss) per $ 0.40 $ (0.28) $ 0.31 $ 0.15 $ 0.44share - continuing operations

Non-GAAP dilutive net income (loss) $ 0.06 $ 0.05 $ (0.10) $ 0.11 $ (0.19)per share - continuing operations

^1In accordance with the if-converted method, net loss available to commonstockholders excludes interest expense related to the 0.875% and 4.00%debentures if the debentures are considered converted in the calculation of netloss per diluted share. If the conversion option for a debenture is not in themoney for the relevant period, the potential conversion of the debenture underthe if-converted method is excluded from the calculation of non-GAAP net lossper diluted share.

Adjusted EBITDA:

THREE MONTHS ENDED SIX MONTHS ENDED

July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020

GAAP net income (loss) fromcontinuing operations attributable $ 75,207 $ (48,385) $ 55,890 $ 26,822 $ 77,430to stockholders

Adjustments based on IFRS:

Legacy utility and power plant - - - - (34)projects

Legacy sale-leaseback transactions - - - - 20

Mark-to-market (gain) loss on (83,746) 44,730 (71,060) (39,016) (118,931)equity investments

Other adjustments:

Results of operations of legacy 2,031 7,066 - 9,097 -business to be exited

Construction revenue on solar - - - - 4,735service contracts

Gain on sale and impairment of (587) (5,383) (317) (5,970) (1,039)residential lease assets

Litigation 3,493 5,210 - 8,703 485

Stock-based compensation expense 10,037 5,013 3,955 15,050 8,933

Amortization of intangible assets - - 1,784 - 3,570

Gain on business divestitures, net (224) - (10,529) (224) (10,529)

Transaction-related costs 225 130 1,382 355 1,863

Executive transition costs 502 - - 502 -

Business reorganization costs 904 954 - 1,858 -

Restructuring charges 808 3,766 1,259 4,574 2,835

Gain on convertible debt repurchased - - - - (2,956)

Cash interest expense, net of 7,607 7,914 8,317 15,521 17,184interest income

Provision for (benefit from) income 2,427 (5,222) 1,106 (2,795) 1,991taxes

Depreciation 3,486 3,342 3,933 6,828 7,432

Adjusted EBITDA $ 22,170 $ 19,135 $ (4,280) $ 41,305 $ (7,011)

Q3 2021 GUIDANCE and FY 2021 GUIDANCE

(in thousands) Q3 2021 FY 2021

Revenue (GAAP and Non-GAAP)$325,000-$375,000$1,410,000-$1,490,000

Net (loss) income (GAAP) $(10,000)-$0 $40,000-$60,000

Adjusted EBITDA^1 $21,000-$31,000 $110,000-$130,000

* Consistent with prior quarters, Adjusted EBITDA guidance for Q3 2021 and fiscal 2021 include net adjustments that decrease GAAP net loss by approximately $31 million and increase GAAP net income by approximately $70 million, respectively, primarily relating to the following adjustments: mark-to-market (gain) loss on equity investments, stock-based compensation expense, business reorganization costs, restructuring charges, litigation, interest expense, depreciation, income taxes, and other adjustments.SUPPLEMENTAL DATA

(In thousands, except percentages)

The following supplemental data represent the adjustments that are included orexcluded from SunPower's non-GAAP revenue, gross profit/margin, net income(loss) and net income (loss) per diluted share measures for each periodpresented in the Consolidated Statements of Operations contained herein.

THREE MONTHS ENDED

July 4, 2021

Revenue Gross Profit / Margin Operating expenses

Sales, Gain on Other Provision Net income Commercial Commercial Research sale and Gain for (loss) Residential, and Intersegment Residential, and Intersegment general Restructuring impairment on income, income attributable Light Industrial Others eliminations Light Industrial Others eliminations and of business to Commercial Solutions Commercial Solutions and charges residential divestitures, net taxes stockholders development lease net administrative assets

GAAP $ 254,119 $ 48,176 $ 6,632 $ - $ 57,102 $ 321 $ 3,189 $ 419 $ - $ - $ - $ - $ - $ - $ - $ 75,207

Adjustments based on IFRS:

Mark-to-market loss on equity investments - - - - - - - - - - - - - (83,746) - (83,746)

Other adjustments:

Results of operations of legacy business to be - - (4) - - - 2,031 - - - - - - - - 2,031exited

Gain on sale and impairment of residential - - - - (519) - - - - - - (68) - - - (587)lease assets

Litigation - - - - - - - - - 3,493 - - - - - 3,493

Executive transition costs - - - - - - - - - 502 - - - - - 502

Stock-based compensation expense - - - - 627 382 60 - 1,456 7,512 - - - - - 10,037

Gain on business divestitures, net - - - - - - - - - - - - (224) - - (224)

Business reorganization costs - - - - - - - - - 904 - - - - - 904

Transaction-related costs - - - - - - - - - 375 - - - (150) - 225

Restructuring charges - - - - - - - - - - 808 - - - - 808

Tax effect - - - - - - - - - - - - - - 1,772 1,772

Non-GAAP $ 254,119 $ 48,176 $ 6,628 $ - $ 57,210 $ 703 $ 5,280 $ 419 $ 10,422

April 4, 2021

Revenue Gross Profit / Margin Operating expenses Other Sales, expense Benefit Net (loss) Commercial Commercial Research Gain on sale and from income Residential,and Intersegment Residential, and Intersegment general Restructuringimpairment of (income),income attributable Light IndustrialOthers eliminations Light IndustrialOthers eliminations and residential lease to Commercial Solutions Commercial Solutions and charges assets net taxes stockholders development administrative

GAAP $237,937 $66,263 $2,187$ 11 $52,574 $4,211 $(8,172)$ 1,261 $ - $ - $ - $ - $ - $ - $ (48,385)

Adjustments based on IFRS:

Mark-to-market loss on equity investments- - - - - - - - - - - - 44,730 - 44,730

Other adjustments:

Results of operations of legacy business - - (621) - - - 7,878 (812) - - - - - - 7,066 to be exited

Gain on sale and impairment of - - - - (494) - - - - (4,663) - (226) - - (5,383) residential lease assets

Litigation - - - - - - - - - 5,210 - - - - 5,210

Stock-based compensation expense - - - - 841 - 46 - 370 3,756 - - - - 5,013

Business reorganization costs - - - - - - - - - 954 - - - - 954

Transaction-related costs - - - - - - - - - 159 - - (29) - 130

Restructuring charges - - - - - - - - - - 3,766 - - - 3,766

Tax effect - - - - - - - - - - - - - (3,839) (3,839)

Non-GAAP $237,937 $66,263 $1,566$ 11 $52,921 $4,211 $(248) $ 449 $ 9,262

June 28, 2020

Revenue Gross Profit / Margin Operating expenses Provision Sales, Other for Net income Commercial Commercial Research Loss on sale and (loss) Residential,and IntersegmentResidential, and Intersegment general Restructuringimpairment of Gain on businessincome, income attributable Light IndustrialOthers elimination Light IndustrialOthers elimination and residential lease divestitures, to Commercial Solutions Commercial Solutions and charges assets net net taxes stockholders development administrative

GAAP $ 160,290 $50,320 $12,700$(5,643) $26,204 $8,924 $(6,283)$(3,194) $ - $ - $ - $ - $ - $ - $ - $55,890

Adjustments based on IFRS:

Mark-to-market gain on equity investments- - - - - - - - - - - - - (71,060)- (71,060)

Other adjustments:

Gain on sale and impairment of - - - - (458) - - - - - - 141 - - - (317) residential lease assets

Stock-based compensation expense - - - - 471 - - - - 3,484 - - - - - 3,955

Amortization of intangible assets - - - - - 1,784 - - - - - - - - - 1,784

Gain on business divestitures, net - - - - - - - - - - - - (10,458) (71) - (10,529)

Transaction-related costs - - - - - - - - - 1,382 - - - - - 1,382

Restructuring charges - - - - - - - - - - 659 - - - - 659

Tax effect - - - - - - - - - - - - - - 994 994

Non-GAAP $ 160,290 $50,320 $12,700$(5,643) $26,217 $10,708 $(6,283)$(3,194) $(17,242)

SIX MONTHS ENDED

July 4, 2021

Revenue Gross Profit / Margin Operating expenses

Sales, Other Benefit Net income Commercial Commercial Research Gain on from income (loss) Residential, and Intersegment Residential, and Intersegment general Restructuring Gain on sale and impairment of business income, attributable Light Industrial Others eliminations Light Industrial Others eliminations and residential lease assets divestitures, taxes to Commercial Solutions Commercial Solutions and charges net net stockholders development administrative

GAAP $ 492,056 $ 114,439 $ 8,819 $ 11 $ 109,676 $ 4,532 $ (4,983) $ 1,680 $ - $ - $ - $ - $ - $ - $ - $ 26,822

Adjustments based on IFRS:

Mark-to-market loss on equity investments - - - - - - - - - - - - - (39,016) - (39,016)

Other adjustments:

Results of operations of legacy business - - (625) - - - 9,909 (812) - - - - - - - 9,097to be exited

Gain on sale and impairment of - - - - (1,013) - - - - (4,663) - (294) - - (5,970)residential lease assets

Litigation - - - - - - - - - 8,703 - - - - - 8,703

Executive transition costs - - - - - - - - - 502 - - - - 502

Stock-based compensation expense - - - - 1,468 382 106 - 1,826 11,268 - - - - - 15,050

Gain on business divestitures, net - - - - - - - - - - - - (224) - - (224)

Business reorganization costs - - - - - - - - - 1,858 - - - - - 1,858

Transaction-related costs - - - - - - - - - 534 - - - (179) - 355

Restructuring charges - - - - - - - - - - 4,574 - - - - 4,574

Tax effect - - - - - - - - - - - - - - (2,067) (2,067)

Non-GAAP $ 492,056 $ 114,439 $ 8,194 $ 11 $ 110,131 $ 4,914 $ 5,032 $ 868 $ 19,684

June 28, 2020

Revenue Gross Profit / Margin Operating expenses Provision Sales, Other for Net income Commercial Commercial Research (loss) Residential,and Intersegment Residential,and Intersegment general RestructuringGain on sale and impairment ofGain on business income,income attributable Light Industrial Others elimination Light Industrial Others elimination and residential lease assets divestitures, net to Commercial Solutions Commercial Solutions and charges net taxes stockholders development administrative

GAAP $387,038 $101,138 $45,559$(25,522) $ 54,843 $5,877 $(15,738)$9,852 $ - $ - $ - $ - $ - $ - $ - $77,430

Adjustments based on IFRS:

Legacy utility and power plant - (207) - - - (34) - - - - - - - - - (34) projects

Legacy sale-leaseback transactions- - - - 20 - - - - - - - - - - 20

Mark-to-market gain on equity - - - - - - - - - - - - - (118,931) - (118,931) investments

Other adjustments: - - - - - - - - - - - - - - -

Gain on sale and impairment of - - - - (906) - - - - - - (133) - - - (1,039) residential lease assets

Construction revenue on solar 5,392 - - - 4,735 - - - - - - - - - - 4,735 services contracts

Litigation - - - - - - - - - 485 - - - - - 485

Stock-based compensation expense - - - - 1,030 - - - - 7,903 - - - - - 8,933

Amortization of intangible assets - - - - - 3,570 - - - - - - - - - 3,570

Gain on business divestitures, net- - - - - - - - - - - - (10,458) (71) - (10,529)

Transaction-related costs - - - - - - - - - 1,863 - - - - - 1,863

Restructuring charges - - - - - - - - - - 2,235 - - - - 2,235

Gain on convertible debt - - - - - - - - - - - - - (2,956) - (2,956) repurchased

Tax effect - - - - - - - - - - - - - - 1,846 1,846

Non-GAAP $392,430 $100,931 $45,559$(25,522) $ 59,722 $9,413 $(15,738)$9,852 $(32,372)

View original content to download multimedia: https://www.prnewswire.com/news-releases/sunpower-reports-second-quarter-2021-results-301347583.html

SOURCE SunPower Corp.