SunPower Corp. announced financial results for its first quarter ended April 1, 2018.
"Our solid execution, ability to meet project deadlines and commitment to controlling costs enabled us to exceed our forecasts across all of our business segments," said Tom Werner, SunPower CEO and chairman of the board. "In our distributed generation business (DG), we continued to gain share in both our residential and commercial end markets as we saw strong demand throughout the quarter. In commercial, we completed and sold a number of key projects including our 7MW Joint Base Anacostia-Bolling (JBAB) project as well as our 4-MW carport, rooftop and ground system for Campbell Soup. Additionally, interest in our recently launched Helix commercial storage solution remained strong as we added to our pipeline during the quarter. Demand for our high quality, industry leading residential solutions was also robust as we exceeded plan in all core markets with our U.S. residential business posting record first quarter results. In our power plant business, we executed well as we met our project milestones including the sale of our 126-MW Guajiro development project in Mexico to Atlas Renewables. Finally, we further expanded the global footprint of our SunPower Solutions (SPS) group as first quarter shipments exceeded 100MW and we remain on plan to deploy up to 1GW in SPS this year.
"In our upstream business, we achieved our cost reduction targets and our Fabs remain at 100 percent utilization. We also continued tool installation for our first full-scale Next Generation Technology (NGT) production line at Fab 3 with first silicon expected in June and volume production planned in the fourth quarter.
"Over a year ago, we embarked on a program to transform the company through the implementation of a number of key operational and strategic initiatives. Operationally, our goal was to improve cash flow, delever the balance sheet, divest certain assets, reduce operating expenses and simplify our financial reporting. Strategically, our initiatives have focused on improving our competitive position in a challenging industry environment while structuring the company for sustained profitability. As a result, we made the decision to sell our remaining power plant development assets, expand our global equipment sales business through our SPS group and reallocate resources to our faster growing, higher margin global DG business. Additionally, we committed to investing in those areas that offer further differentiation and growth potential including our industry leading cell and panel technology, our solar-plus-storage offerings, as well as our complete solutions product suite.
"Given the strong progress of our transformation initiatives over the last 12 months, we have now turned our efforts to the next phase of our strategy: optimizing our corporate structure to further reduce costs, improve financial transparency and better position the company for sustained profitability. As a result of these efforts, we believe that a model that more closely aligns us towards an upstream and downstream business unit structure offers us significant opportunities to maximize our core strengths in manufacturing, technology and products while streamlining decision making and simplifying our financial reporting.
"Specifically, in upstream we will focus our efforts on further leveraging our proprietary back contact cell technology, including NGT, as well as the continued ramp of our unique P-Series product which we expect to reach multi-GW scale by the end of this year. Also, with the recent announcement of our planned acquisition of SolarWorld Americas, we expect to expand our U.S. manufacturing footprint, adding additional cell and module capacity to serve growing demand in North America. With a broad portfolio of high efficiency, high quality DG product offerings, we believe we can capture greater market share and superior margins in the residential and commercial segments due to our differentiated technology attributes. In relation to the downstream, we plan on increasing investment in our U.S. DG business while leveraging our SPS group to continue to meet the demand of our global power plant and DG customer base. With the DG industry forecasted to grow by 40 percent over the next five years, our extensive product portfolio, solar-plus-storage offerings and a strong global power plant and rooftop channel strategy through SPS, we believe the transition to our new business unit structure will position us to drive long term, sustained financial success for our shareholders.
"Finally, we are progressing on our corporate initiatives to delever our balance sheet. For example, the sale of our ownership stake in 8point3 Energy Partners remains on plan with the shareholder vote on the proposed transaction scheduled for May 23, 2018. Also, we expect to monetize more than 400MW of SunPower leases that we currently hold on our balance sheet over the coming quarters. In addition, we are in the process of actively divesting our North America power plant development assets in order to focus exclusively on leveraging our SPS group for power plant equipment sales. We believe these actions, as well as others, will materially increase our liquidity, improve cash flow and simplify our financial statements," concluded Werner.
"Our strong first quarter performance was driven by solid execution in all markets while prudently managing expenses," said Chuck Boynton, SunPower chief financial officer. "Financially, our efforts remain focused on improving cash flow, managing our working capital and executing on our restructuring initiatives. With our asset monetization plans on track and continued cost control, we are well positioned to retire our $300 million convert in June as well as having the resources to fund our growth plans this year."
First quarter fiscal 2018 non-GAAP results exclude net adjustments that, in the aggregate, improved non-GAAP earnings by $87.8 million, including $1.4 million related to sale-leaseback transactions, $45.1 million related to impairment of residential lease assets, $18.7 million related to cost of above market polysilicon, $11.2 million related to restructuring expense, $8.8 million related to stock-based compensation expense, and $2.6 million related to intangibles.
The company's second quarter GAAP guidance is as follows: revenue of $360 million to $410 million, gross margin of 2.5 percent to 4.5 percent and a net loss of $125 million to $100 million. Second quarter 2018 GAAP guidance includes the impact of revenue and timing deferrals due to sale-leaseback transactions as well as charges related to the company's restructuring initiatives. On a non-GAAP basis, the company expects revenue of $375 million to $425 million, gross margin of 6 percent to 8 percent, Adjusted EBITDA of $10 million to $35 million and megawatts deployed in the range of 350MW to 380MW. Second quarter non-GAAP guidance reflects timing differences related to the revenue recognition of certain power plant projects during the quarter.
Also, the company now expects fiscal year 2018 Adjusted EBITDA to be in the range of $75 to $125 million. Fiscal year 2018 Adjusted EBITDA guidance assumes a $55 million negative impact related to tariffs associated with the section 201 trade case as well as a reduction of approximately $50 million of non-controlling interest income resulting from the anticipated sale of the company's lease portfolio in the second half of the year. On a comparative basis under the same assumptions, the company expects 10 to 15 percent year-over-year growth in 2018 Adjusted EBITDA.