```markdown [Part I.](index=5&type=section&id=Part%20I.) This section covers the company's business overview, risk factors, properties, and legal disclosures [Item 1. Business](index=6&type=section&id=Item%201.%20Business) SunPower is a leading solar and energy services provider in the U.S. and Canada, offering integrated solutions and adapting to regulatory shifts - SunPower is a leading solar technology and energy services provider in the U.S. and Canada, offering fully integrated solar, storage, and home energy solutions[22](index=22&type=chunk) - The company's strategy is built on five pillars: Customer Care, Products, Growth (multi-channel), Digital Innovation, and Financial Solutions[22](index=22&type=chunk) - Completed the sale of its Commercial and Industrial Solutions (C&I Solutions) business for a preliminary purchase price of **$190.0 million**, receiving net cash consideration of **$149.2 million**[25](index=25&type=chunk) - The Inflation Reduction Act (IRA) was enacted, expanding and extending the solar investment tax credit (ITC) to **30%** for eligible solar and standalone battery storage systems through 2032, which is favorable to the business[27](index=27&type=chunk)[28](index=28&type=chunk) - The new net energy metering program (NEM 3.0) in California, effective April 15, 2023, is expected to increase demand for solar systems with battery storage due to reduced utility bill savings for solar-only systems[31](index=31&type=chunk) - Launched SunPower Financial in fiscal 2021 to offer a complete range of financing products, including loans and leases, to make renewable energy more affordable and accessible[39](index=39&type=chunk) - The majority of solar panels are sourced from Maxeon Solar under a master supply agreement, with diversification efforts including Waaree Energies Ltd. and Hanwha Qcells[42](index=42&type=chunk) - As of January 1, 2023, SunPower held **238 patents** in the United States and **202 patents** in foreign jurisdictions, with additional applications pending[56](index=56&type=chunk) Employee Headcount as of January 1, 2023 | Category | Number of Employees | | :----------------------- | :------------------ | | Full-time employees | 4,710 | | - United States | 3,480 | | - Philippines | 1,230 | | Engaged in construction | 2,725 | | Research and development | 100 | | Sales and marketing | 1,415 | | General and administrative | 470 | | Contractors | 2,280 | [Corporate History](index=6&type=section&id=Corporate%20History) [Company Overview](index=6&type=section&id=Company%20Overview) [Recent Developments](index=7&type=section&id=Recent%20Developments) [Sale of the C&I Solutions Business](index=7&type=section&id=Sale%20of%20the%20C%26I%20Solutions%20Business) [Inflation Reduction Act of 2022 ("IRA")](index=7&type=section&id=Inflation%20Reduction%20Act%20of%202022%20%28%22IRA%22%29) [Segment Information](index=7&type=section&id=Segment%20Information) [Our COVID-19 Response](index=8&type=section&id=Our%20COVID-19%20Response) [Outlook](index=8&type=section&id=Outlook) [Solutions](index=8&type=section&id=Solutions) [OneRoof®](index=9&type=section&id=OneRoof%C2%AE) [SunVault™ Storage](index=9&type=section&id=SunVault%E2%84%A2%20Storage) [Flexible Financing Options](index=9&type=section&id=Flexible%20Financing%20Options) [Supply](index=10&type=section&id=Supply) [Technology](index=10&type=section&id=Technology) [Energy Management Services](index=10&type=section&id=Energy%20Management%20Services) [Inverters](index=10&type=section&id=Inverters) [Warranties](index=11&type=section&id=Warranties) [Customers](index=11&type=section&id=Customers) [Competition](index=11&type=section&id=Competition) [Intellectual Property](index=12&type=section&id=Intellectual%20Property) [Regulations](index=13&type=section&id=Regulations) [Public Policy Considerations](index=13&type=section&id=Public%20Policy%20Considerations) [Environmental, Social, Governance ("ESG")](index=14&type=section&id=Environmental%2C%20Social%2C%20Governance%20%28%22ESG%22%29) [Information concerning certain limited activities related to Iran](index=14&type=section&id=Information%20concerning%20certain%20limited%20activities%20related%20to%20Iran) [Exploration & Production](index=14&type=section&id=Exploration%20%26%20Production) [Gas, Renewables & Power](index=15&type=section&id=Gas%2C%20Renewables%20%26%20Power) [Marketing & Services](index=15&type=section&id=Marketing%20%26%20Services) [Patents & Trademarks](index=16&type=section&id=Patents%20%26%20Trademarks) [Seasonal Trends and Economic Incentives](index=16&type=section&id=Seasonal%20Trends%20and%20Economic%20Incentives) [Human Capital Management](index=16&type=section&id=Human%20Capital%20Management) [How SunPower develops, attracts, and retains personnel](index=16&type=section&id=How%20SunPower%20develops%2C%20attracts%2C%20and%20retains%20personnel) [The importance of diversity, equity, and inclusion](index=17&type=section&id=The%20importance%20of%20diversity%2C%20equity%2C%20and%20inclusion) [A strong safety culture](index=17&type=section&id=A%20strong%20safety%20culture) [Available Information](index=17&type=section&id=Available%20Information) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including pandemic impacts, financing dependency, operational challenges, supply chain issues, and regulatory changes - The COVID-19 pandemic continues to adversely affect business operations, demand, supply chains, and customer purchasing ability[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - Growth strategy is highly dependent on the continued availability of third-party financing and SunPower Financial's ability to provide direct financing, which is sensitive to general economic conditions and interest rates[105](index=105&type=chunk)[106](index=106&type=chunk)[109](index=109&type=chunk) - Changes in international trade policies, tariffs (e.g., Section 201, Section 301, AD/CVD duties), or trade disputes could significantly increase product prices and reduce demand[100](index=100&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk) - Reduction, modification, or elimination of government incentives (e.g., solar investment tax credit, net metering) could cause revenue to decline and harm financial results[123](index=123&type=chunk)[124](index=124&type=chunk) - Dependence on a limited number of suppliers for critical components (solar modules, microinverters, storage solutions) exposes the company to risks of shortages, interruptions, delays, and price changes[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Quality issues with solar and related products, such as the third-party connector issue in fiscal 2021 (**$19.8 million** in repair costs), can decrease sales, profit, and harm reputation[164](index=164&type=chunk)[165](index=165&type=chunk) - Substantial indebtedness of approximately **$507.6 million** as of January 1, 2023, and debt service requirements could adversely affect business operations and financial condition[149](index=149&type=chunk) - Total and GIP's ownership of approximately **50.5%** of common stock gives them significant influence and control, potentially limiting other stockholders' influence and affecting stock liquidity[209](index=209&type=chunk)[211](index=211&type=chunk) - As of January 1, 2023, the company had federal net operating loss carryforwards of **$147.3 million** and California state net operating loss carryforwards of **$638.1 million**, subject to limitations on utilization[222](index=222&type=chunk)[583](index=583&type=chunk) [Risks Related to COVID-19 Pandemic](index=18&type=section&id=Risks%20Related%20to%20COVID-19%20Pandemic) [Risks Related to the Spin-Off](index=18&type=section&id=Risks%20Related%20to%20the%20Spin-Off) [Risks Related to Our Sales Channels](index=19&type=section&id=Risks%20Related%20to%20Our%20Sales%20Channels) [Risks Related to Our Liquidity](index=28&type=section&id=Risks%20Related%20to%20Our%20Liquidity) [Risks Related to Our Supply Chain](index=30&type=section&id=Risks%20Related%20to%20Our%20Supply%20Chain) [Risks Related to Our Operations](index=32&type=section&id=Risks%20Related%20to%20Our%20Operations) [Risks Related to Our Intellectual Property](index=38&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) [Risks Related to Our Equity Securities](index=40&type=section&id=Risks%20Related%20to%20Our%20Equity%20Securities) [General Risk Factors](index=43&type=section&id=General%20Risk%20Factors) [Item 1B. Unresolved Staff Comments](index=47&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[250](index=250&type=chunk) [Item 2. Properties](index=47&type=section&id=Item%202.%20Properties) SunPower's principal properties are leased corporate headquarters and global support offices in various U.S. states and the Philippines Principal Properties as of January 1, 2023 | Facility | Location | Square Footage | Ownership | Year When Lease Term Ends | | :----------------------- | :----------------------- | :------------- | :-------- | :------------------------ | | Corporate headquarters | California, U.S. | 163,000 | Leased | 2023 | | Global support offices | Texas, U.S. | 46,000 | Leased | 2024 | | Global support offices | Texas, U.S. | 23,000 | Leased | 2024 | | Global support offices | Philippines | 129,000 | Leased | 2026 | | Global support offices | Utah, U.S. | 54,169 | Leased | 2027 | | Global support offices | Georgia, U.S. | 2,000 | Leased | 2023 | | Global support offices | North Carolina, U.S. | 2,000 | Leased | 2023 | | Global support offices | Washington, U.S. | 17,969 | Leased | 2027 | [Item 3. Legal Proceedings](index=48&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference from Note 9 to the Consolidated Financial Statements - Legal proceedings disclosure is incorporated by reference from Note 9. Commitments and Contingencies-Legal Matters[252](index=252&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to SunPower Corporation - Mine Safety Disclosures are not applicable[253](index=253&type=chunk) [Part II.](index=47&type=section&id=Part%20II.) This section provides financial market information, management's discussion and analysis, market risk disclosures, and audited financial statements [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) SunPower's common stock is listed on Nasdaq, with approximately 575 holders, and no cash dividends are planned due to debt restrictions - Common stock is listed on the Nasdaq Global Select Market under the trading symbol "SPWR"[253](index=253&type=chunk) - As of March 3, 2023, there were approximately **575** holders of record of common stock[253](index=253&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future, with debt agreements restricting such payments[254](index=254&type=chunk) Issuer Purchases of Equity Securities (October 3, 2022 - January 1, 2023) | Period | Total Number of Shares Purchased | Average Price Per Share ($) | | :------------------------------------- | :------------------------------- | :-------------------------- | | October 3, 2022 through October 30, 2022 | 11,999 | 22.98 | | October 31, 2022 through November 27, 2022 | 28,160 | 17.53 | | November 28, 2022 through January 1, 2023 | 7,313 | 23.72 | | **Total** | **47,472** | | - Shares purchased represent shares surrendered to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees[256](index=256&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenues increased significantly in fiscal 2022, driven by organic growth and acquisitions, with improved net income and strong liquidity - Total revenues increased by **54%** in fiscal 2022 compared to fiscal 2021, primarily due to higher volume in organic residential business across all channels and the acquisition of Blue Raven[264](index=264&type=chunk) - Total cost of revenues increased by **53%** in fiscal 2022 due to organic revenue growth, the Blue Raven acquisition, and rising material, freight, and labor costs[267](index=267&type=chunk) - Gross margin remained fairly constant at **21%** in fiscal 2022 compared to **20%** in fiscal 2021[263](index=263&type=chunk)[268](index=268&type=chunk) - SG&A expenses increased by **$135.2 million** in fiscal 2022, driven by the Blue Raven acquisition, strategic hiring, increased investments in subscriptions/licenses/consulting, and higher marketing/advertising expenses[272](index=272&type=chunk) - Net income from continuing operations attributable to stockholders was **$102.4 million** in fiscal 2022, a significant increase from **$6.1 million** in fiscal 2021[263](index=263&type=chunk) - Other income, net, increased by **$93.1 million** in fiscal 2022, primarily due to a **$115.2 million** gain on an equity investment with readily determinable fair value[284](index=284&type=chunk) - Income tax benefit of **$8.2 million** in fiscal 2022 was primarily due to the reversal of deferred taxes for California following Senate Bill 113, which restored the ability to utilize net operating losses[285](index=285&type=chunk) - Net cash used in operating activities increased by **$137.0 million** in fiscal 2022, primarily due to changes in operating assets and liabilities, including increased prepaid expenses, deferred revenue, and inventories[313](index=313&type=chunk) - Net cash provided by investing activities increased by **$438.7 million** in fiscal 2022, mainly from cash received from the sale of equity investments and the C&I Solutions business[315](index=315&type=chunk) - As of January 1, 2023, unrestricted cash and cash equivalents were **$377.0 million**, up from **$123.7 million** as of January 2, 2022[318](index=318&type=chunk) - The company repaid **$425.0 million** of **4.00%** debentures due 2023 on January 17, 2023, using cash on hand, proceeds from Enphase stock sales, and a **$100.0 million** draw from its Term Loan Facility[321](index=321&type=chunk)[453](index=453&type=chunk) Consolidated Statements of Operations Summary (Fiscal Years Ended) | Metric (in thousands) | January 1, 2023 | January 2, 2022 | January 3, 2021 | | :-------------------- | :-------------- | :-------------- | :-------------- | | Total revenues | $1,741,072 | $1,132,029 | $870,017 | | Total cost of revenues | $1,377,169 | $902,718 | $733,371 | | Gross profit | $363,903 | $229,311 | $136,646 | | Operating income (loss) | $(492) | $14,754 | $(7,546) | | Net income (loss) from continuing operations attributable to stockholders | $102,358 | $6,101 | $600,381 | Cash Flows Summary (Fiscal Years Ended) | Metric (in thousands) | January 1, 2023 | January 2, 2022 | January 3, 2021 | | :---------------------------------------- | :-------------- | :-------------- | :-------------- | | Net cash (used in) provided by operating activities | $(181,482) | $(44,476) | $(187,391) | | Net cash provided by (used in) investing activities | $492,971 | $54,294 | $129,190 | | Net cash (used in) provided by financing activities | $(58,070) | $(108,009) | $(153,852) | [Overview](index=49&type=section&id=Overview) [Recent Developments](index=49&type=section&id=Recent%20Developments) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) [Total Revenues](index=50&type=section&id=Total%20Revenues) [Total Cost of Revenues and Gross Margin](index=51&type=section&id=Total%20Cost%20of%20Revenues%20and%20Gross%20Margin) [Research and Development ("R&D")](index=51&type=section&id=Research%20and%20Development%20%28%22R%26D%22%29) [Sales, General, and Administrative ("SG&A")](index=52&type=section&id=Sales%2C%20General%2C%20and%20Administrative%20%28%22SG%26A%22%29) [Restructuring charges (credits)](index=52&type=section&id=Restructuring%20charges%20%28credits%29) [(Gain) loss on sale and impairment of residential lease assets](index=52&type=section&id=%28Gain%29%20loss%20on%20sale%20and%20impairment%20of%20residential%20lease%20assets) [(Gain) loss on business divestitures, net](index=53&type=section&id=%28Gain%29%20loss%20on%20business%20divestitures%2C%20net) [Expense (income) from transition services agreement, net](index=53&type=section&id=Expense%20%28income%29%20from%20transition%20services%20agreement%2C%20net) [Other Income (Expense), Net](index=53&type=section&id=Other%20Income%20%28Expense%29%2C%20Net) [Income Taxes](index=54&type=section&id=Income%20Taxes) [Equity in earnings (losses) of unconsolidated investees](index=55&type=section&id=Equity%20in%20earnings%20%28losses%29%20of%20unconsolidated%20investees) [Net Loss (Income) Attributable to Noncontrolling Interests](index=55&type=section&id=Net%20Loss%20%28Income%29%20Attributable%20to%20Noncontrolling%20Interests) [Critical Accounting Estimates](index=55&type=section&id=Critical%20Accounting%20Estimates) [Revenue Recognition](index=56&type=section&id=Revenue%20Recognition) [Solar Power Systems and Component Sales](index=56&type=section&id=Solar%20Power%20Systems%20and%20Component%20Sales) [Accounting for Business Combinations](index=56&type=section&id=Accounting%20for%20Business%20Combinations) [Product Warranties](index=56&type=section&id=Product%20Warranties) [Inventories](index=57&type=section&id=Inventories) [Retail installment contract receivables, net](index=57&type=section&id=Retail%20installment%20contract%20receivables%2C%20net) [Accounting for Income Taxes](index=57&type=section&id=Accounting%20for%20Income%20Taxes) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Flows](index=58&type=section&id=Cash%20Flows) [Operating Activities](index=58&type=section&id=Operating%20Activities) [Investing Activities](index=58&type=section&id=Investing%20Activities) [Financing Activities](index=59&type=section&id=Financing%20Activities) [Debt and Credit Sources](index=59&type=section&id=Debt%20and%20Credit%20Sources) [Liquidity](index=59&type=section&id=Liquidity) [Contractual Obligations](index=60&type=section&id=Contractual%20Obligations) [Liabilities Associated with Uncertain Tax Positions](index=60&type=section&id=Liabilities%20Associated%20with%20Uncertain%20Tax%20Positions) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to credit, interest rate, and equity price risks, particularly from customer financing and Enphase stock investments - Exposed to credit risk from customer payment delinquencies on retail installment contracts, with an average FICO score of **740+** for customers as of January 1, 2023[329](index=329&type=chunk) - Interest rate risk is significant due to reliance on debt financing for customers and long-term financing receivables. A hypothetical **50 basis points** increase/decrease in market interest rates would change the fair value of receivables by approximately **$3.6 million**/**$3.4 million**[330](index=330&type=chunk) - Recorded a gain of **$115.2 million** on Enphase common stock in fiscal 2022 and sold **two million shares** for **$440.1 million**. Retained **0.5 million shares** as of January 1, 2023, which were subsequently sold for **$121.7 million** in January 2023[332](index=332&type=chunk)[492](index=492&type=chunk)[493](index=493&type=chunk) - Outstanding convertible debentures of **$425.0 million** (**4.00%** due 2023) were repaid on January 17, 2023[334](index=334&type=chunk)[453](index=453&type=chunk) [Credit Risk](index=59&type=section&id=Credit%20Risk) [Interest Rate Risk](index=61&type=section&id=Interest%20Rate%20Risk) [Equity Price Risk Involving Minority Investments in Joint Ventures and Other Public and Non-Public Companies](index=61&type=section&id=Equity%20Price%20Risk%20Involving%20Minority%20Investments%20in%20Joint%20Ventures%20and%20Other%20Public%20and%20Non-Public%20Companies) [Interest Rate Risk and Market Price Risk Involving Debt](index=62&type=section&id=Interest%20Rate%20Risk%20and%20Market%20Price%20Risk%20Involving%20Debt) [Item 8. Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements, including balance sheets, statements of operations, and cash flows - Ernst & Young LLP issued an **unqualified opinion** on the consolidated financial statements for the period ended January 1, 2023, and on the **effectiveness** of internal control over financial reporting[339](index=339&type=chunk)[348](index=348&type=chunk) - A **critical audit matter** identified was the high degree of subjectivity in auditing the company's standard product warranty statistical model due to limited historical data and sensitivity of assumptions[344](index=344&type=chunk) Consolidated Balance Sheets Summary (in thousands) | Metric | January 1, 2023 | January 2, 2022 | | :---------------------- | :-------------- | :-------------- | | Total current assets | $1,268,514 | $1,073,466 | | Total assets | $1,780,007 | $1,554,806 | | Total current liabilities | $1,050,346 | $509,596 | | Total liabilities | $1,204,353 | $1,164,782 | | Total equity | $575,654 | $390,024 | Consolidated Statements of Operations Summary (in thousands) | Metric (in thousands) | January 1, 2023 | January 2, 2022 | January 3, 2021 | | :-------------------- | :-------------- | :-------------- | :-------------- | | Total revenues | $1,741,072 | $1,132,029 | $870,017 | | Gross profit | $363,903 | $229,311 | $136,646 | | Operating (loss) income | $(492) | $14,754 | $(7,546) | | Net income (loss) from continuing operations | $107,034 | $5,956 | $599,194 | | Net income (loss) attributable to stockholders | $56,037 | $(37,358) | $475,048 | Consolidated Statements of Cash Flows Summary (in thousands) | Metric (in thousands) | January 1, 2023 | January 2, 2022 | January 3, 2021 | | :---------------------------------------- | :-------------- | :-------------- | :-------------- | | Net cash (used in) provided by operating activities | $(181,482) | $(44,476) | $(187,391) | | Net cash provided by (used in) investing activities | $492,971 | $54,294 | $129,190 | | Net cash (used in) provided by financing activities | $(58,070) | $(108,009) | $(153,852) | | Cash, cash equivalents, and restricted cash, end of period | $402,032 | $148,613 | $246,804 | [Report of Independent Registered Public Accounting Firm](index=63&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Opinion on the Financial Statements](index=63&type=section&id=Opinion%20on%20the%20Financial%20Statements) [Basis for Opinion](index=63&type=section&id=Basis%20for%20Opinion) [Critical Audit Matter](index=63&type=section&id=Critical%20Audit%20Matter) [Report of Independent Registered Public Accounting Firm (Internal Control)](index=64&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28Internal%20Control%29) [Opinion on Internal Control over Financial Reporting](index=64&type=section&id=Opinion%20on%20Internal%20Control%20over%20Financial%20Reporting) [Basis for Opinion (Internal Control)](index=64&type=section&id=Basis%20for%20Opinion%20%28Internal%20Control%29) [Definition and Limitations of Internal Control Over Financial Reporting](index=65&type=section&id=Definition%20and%20Limitations%20of%20Internal%20Control%20Over%20Financial%20Reporting) [Consolidated Balance Sheets](index=66&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations](index=69&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Comprehensive Income (Loss)](index=71&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) [Consolidated Statements of Equity](index=72&type=section&id=Consolidated%20Statements%20of%20Equity) [Consolidated Statements of Cash Flows](index=74&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Notes to the Consolidated Financial Statements](index=76&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=76&type=section&id=Note%201.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) [Organization](index=76&type=section&id=Organization) [Liquidity](index=77&type=section&id=Liquidity) [Basis of Presentation and Preparation](index=77&type=section&id=Basis%20of%20Presentation%20and%20Preparation) [Management Estimates](index=77&type=section&id=Management%20Estimates) [Summary of Significant Accounting Policies](index=77&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) [Note 2. DISCONTINUED OPERATIONS](index=85&type=section&id=Note%202.%20DISCONTINUED%20OPERATIONS) [Note 3. TRANSACTIONS WITH TOTAL AND TOTALENERGIES SE](index=87&type=section&id=Note%203.%20TRANSACTIONS%20WITH%20TOTAL%20AND%20TOTALENERGIES%20SE) [Affiliation Agreement](index=88&type=section&id=Affiliation%20Agreement) [Cooperation Agreement](index=88&type=section&id=Cooperation%20Agreement) [4.00% Debentures Due 2023](index=89&type=section&id=4.00%25%20Debentures%20Due%202023) [Related-Party Transactions with Total and its Affiliates:](index=89&type=section&id=Related-Party%20Transactions%20with%20Total%20and%20its%20Affiliates%3A) [Note 4. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=90&type=section&id=Note%204.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) [Disaggregation of Revenue](index=90&type=section&id=Disaggregation%20of%20Revenue) [Contract Assets and Liabilities](index=90&type=section&id=Contract%20Assets%20and%20Liabilities) [Note 5. BALANCE SHEET COMPONENTS](index=91&type=section&id=Note%205.%20BALANCE%20SHEET%20COMPONENTS) [Accounts Receivable, Net](index=91&type=section&id=Accounts%20Receivable%2C%20Net) [Allowance for Credit Losses](index=91&type=section&id=Allowance%20for%20Credit%20Losses) [Inventories](index=91&type=section&id=Inventories) [Prepaid Expenses and Other Current Assets](index=91&type=section&id=Prepaid%20Expenses%20and%20Other%20Current%20Assets) [Property, Plant and Equipment, Net](index=92&type=section&id=Property%2C%20Plant%20and%20Equipment%2C%20Net) [Other Long-term Assets](index=92&type=section&id=Other%20Long-term%20Assets) [Accrued Liabilities](index=93&type=section&id=Accrued%20Liabilities) [Other Long-term Liabilities](index=93&type=section&id=Other%20Long-term%20Liabilities) [Accumulated Other Comprehensive Income](index=93&type=section&id=Accumulated%20Other%20Comprehensive%20Income) [Note 6. GOODWILL AND OTHER INTANGIBLE ASSETS](index=93&type=section&id=Note%206.%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) [Goodwill](index=93&type=section&id=Goodwill) [Other Intangible Assets](index=94&type=section&id=Other%20Intangible%20Assets) [Note 7. FAIR VALUE MEASUREMENTS](index=94&type=section&id=Note%207.%20FAIR%20VALUE%20MEASUREMENTS) [Assets and Liabilities Measured at Fair Value on a Recurring Basis](index=95&type=section&id=Assets%20and%20Liabilities%20Measured%20at%20Fair%20Value%20on%20a%20Recurring%20Basis) [Money market funds](index=95&type=section&id=Money%20market%20funds) [Equity investments with fair value option ("FVO")](index=95&type=section&id=Equity%20investments%20with%20fair%20value%20option%20%28%22FVO%22%29) [Level 3 significant unobservable inputs sensitivity](index=96&type=section&id=Level%203%20significant%20unobservable%20inputs%20sensitivity) [Equity investments with readily determinable fair value](index=96&type=section&id=Equity%20investments%20with%20readily%20determinable%20fair%20value) [Interest Rate Swaps](index=96&type=section&id=Interest%20Rate%20Swaps) [Equity investments without readily determinable fair value](index=97&type=section&id=Equity%20investments%20without%20readily%20determinable%20fair%20value) [Retail installment contract receivables, net](index=97&type=section&id=Retail%20installment%20contract%20receivables%2C%20net) [Note 8. RESTRUCTURING](index=97&type=section&id=Note%208.%20RESTRUCTURING) [January 2021 Restructuring Plan](index=97&type=section&id=January%202021%20Restructuring%20Plan) [December 2019 Restructuring Plan](index=98&type=section&id=December%202019%20Restructuring%20Plan) [Note 9. COMMITMENTS AND CONTINGENCIES](index=99&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES) [Facility and Equipment Leases](index=99&type=section&id=Facility%20and%20Equipment%20Leases) [Purchase Commitments](index=101&type=section&id=Purchase%20Commitments) [Product Warranties](index=101&type=section&id=Product%20Warranties) [Liabilities Associated with Uncertain Tax Positions](index=101&type=section&id=Liabilities%20Associated%20with%20Uncertain%20Tax%20Positions) [Indemnifications](index=102&type=section&id=Indemnifications) [Legal Matters](index=103&type=section&id=Legal%20Matters) [Class Action Lawsuit](index=103&type=section&id=Class%20Action%20Lawsuit) [Note 10. EQUITY INVESTMENTS](index=103&type=section&id=Note%2010.%20EQUITY%20INVESTMENTS) [Equity investments without readily determinable fair value](index=104&type=section&id=Equity%20investments%20without%20readily%20determinable%20fair%20value) [Variable Interest Entities ("VIEs")](index=104&type=section&id=Variable%20Interest%20Entities%20%28%22VIEs%22%29) [Unconsolidated VIEs](index=105&type=section&id=Unconsolidated%20VIEs) [Summarized Financial Information of Unconsolidated VIEs](index=105&type=section&id=Summarized%20Financial%20Information%20of%20Unconsolidated%20VIEs) [Related-Party Transactions with Investees](index=106&type=section&id=Related-Party%20Transactions%20with%20Investees) [Consolidated VIEs](index=106&type=section&id=Consolidated%20VIEs) [Note 11. DEBT AND CREDIT SOURCES](index=107&type=section&id=Note%2011.%20DEBT%20AND%20CREDIT%20SOURCES) [Convertible Debt](index=108&type=section&id=Convertible%20Debt) [September 2011 Letter of Credit Facility with Deutsche Bank and Deutsche Bank Trust Company Americas (together, "Deutsche Bank Trust")](index=108&type=section&id=September%202011%20Letter%20of%20Credit%20Facility%20with%20Deutsche%20Bank%20and%20Deutsche%20Bank%20Trust%20Company%20Americas%20%28together%2C%20%22Deutsche%20Bank%20Trust%22%29) [October 2021 Letter of Credit Facility with Bank of the West](index=108&type=section&id=October%202021%20Letter%20of%20Credit%20Facility%20with%20Bank%20of%20the%20West) [Loan Facility with Credit Suisse AG](index=108&type=section&id=Loan%20Facility%20with%20Credit%20Suisse%20AG) [Revolver and Term Loan Facility with Bank of America and Bank of the West](index=109&type=section&id=Revolver%20and%20Term%20Loan%20Facility%20with%20Bank%20of%20America%20and%20Bank%20of%20the%20West) [Note 12. RELATED-PARTY TRANSACTIONS](index=110&type=section&id=Note%2012.%20RELATED-PARTY%20TRANSACTIONS) [Note 13. INCOME TAXES](index=111&type=section&id=Note%2013.%20INCOME%20TAXES) [Valuation Allowance](index=114&type=section&id=Valuation%20Allowance) [Unrecognized Tax Benefits](index=114&type=section&id=Unrecognized%20Tax%20Benefits) [Classification of Interests and Penalties](index=115&type=section&id=Classification%20of%20Interests%20and%20Penalties) [Tax Years and Examination](index=115&type=section&id=Tax%20Years%20and%20Examination) [Note 14. COMMON STOCK](index=116&type=section&id=Note%2014.%20COMMON%20STOCK) [Voting Rights - Common Stock](index=116&type=section&id=Voting%20Rights%20-%20Common%20Stock) [Dividends - Common Stock](index=116&type=section&id=Dividends%20-%20Common%20Stock) [Shares Reserved for Future Issuance Under Equity Compensation Plans](index=116&type=section&id=Shares%20Reserved%20for%20Future%20Issuance%20Under%20Equity%20Compensation%20Plans) [Note 15. NET INCOME (LOSS) PER SHARE](index=116&type=section&id=Note%2015.%20NET%20INCOME%20%28LOSS%29%20PER%20SHARE) [Note 16. STOCK-BASED COMPENSATION](index=118&type=section&id=Note%2016.%20STOCK-BASED%20COMPENSATION) [Equity Incentive Programs](index=118&type=section&id=Equity%20Incentive%20Programs) [Restricted Stock Units](index=119&type=section&id=Restricted%20Stock%20Units) [Note 17. SUBSEQUENT EVENTS](index=119&type=section&id=Note%2017.%20SUBSEQUENT%20EVENTS) [Delaware Stockholder Derivative Action](index=119&type=section&id=Delaware%20Stockholder%20Derivative%20Action) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=121&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in and disagreements with accountants on accounting and financial disclosure[623](index=623&type=chunk) [Item 9A. Controls and Procedures](index=121&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were effective, with an ERP system implemented in fiscal 2022 - Disclosure controls and procedures were **effective** as of January 1, 2023, at a reasonable assurance level[625](index=625&type=chunk) - Internal control over financial reporting was **effective** as of January 1, 2023, based on COSO criteria, and audited by Ernst & Young LLP[626](index=626&type=chunk)[627](index=627&type=chunk) - A new enterprise resource planning (ERP) system was implemented in fiscal 2022, modifying internal control processes, but no other material changes to internal control over financial reporting occurred[628](index=628&type=chunk) [Item 9B. Other Information](index=121&type=section&id=Item%209B.%20Other%20Information) There is no other information to report under this item - No other information to report[629](index=629&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=121&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to SunPower Corporation - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[629](index=629&type=chunk) [Part III.](index=117&type=section&id=Part%20III.) This section outlines corporate governance, executive compensation, security ownership, and related party disclosures [Item 10. Directors, Executive Officers and Corporate Governance](index=122&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Corporate governance, executive officers, and director information is incorporated by reference from the proxy statement - Information is incorporated by reference to the proxy statement for the 2023 annual meeting of stockholders[630](index=630&type=chunk) - The company has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees[630](index=630&type=chunk) [Item 11. Executive Compensation](index=122&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details are incorporated by reference from the 2023 annual meeting proxy statement - Information is incorporated by reference to the proxy statement for the 2023 annual meeting of stockholders[631](index=631&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=122&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and related stockholder matters are incorporated by reference from the proxy statement - Information is incorporated by reference to the proxy statement for the 2023 annual meeting of stockholders[631](index=631&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=122&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related transactions and director independence information is incorporated by reference from the proxy statement - Information is incorporated by reference to the proxy statement for the 2023 annual meeting of stockholders[631](index=631&type=chunk) [Item 14. Principal Accountant Fees and Services](index=122&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the proxy statement - Information is incorporated by reference to the proxy statement for the 2023 annual meeting of stockholders[632](index=632&type=chunk) [Part IV.](index=117&type=section&id=Part%20IV.) This section lists all exhibits, financial statement schedules, and certifications included in the report [Item 15. Exhibits and Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits, financial statement schedules, and certifications included in the report - Includes reports of Ernst & Young LLP and consolidated financial statements (Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Equity, Cash Flows, and Notes)[634](index=634&type=chunk) - All financial statement schedules are omitted as the required information is inapplicable or presented in the Consolidated Financial Statements or Notes[635](index=635&type=chunk) - A comprehensive exhibit index lists various agreements, including the Separation and Distribution Agreement, Affiliation Agreement, Master Supply Agreements with Enphase and Maxeon Solar, and equity incentive plans[636](index=636&type=chunk)[637](index=637&type=chunk)[638](index=638&type=chunk) [Item 16. Form 10-K Summary](index=126&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no summary is provided for the Form 10-K - No Form 10-K Summary is provided[641](index=641&type=chunk) [SIGNATURES](index=127&type=section&id=SIGNATURES) The report is duly signed by the company's principal executive, financial, and accounting officers and directors - The report is signed by Guthrie Dundas, Interim Chief Financial Officer, and Peter Faricy, Chief Executive Officer, among others, on March 9, 2023[643](index=643&type=chunk)[644](index=644&type=chunk) ```

SunPower Corporation (NASDAQ:SPWR) Q4 2022 Earnings Conference Call February 15, 2023 5:00 PM ET Company Participants Mike Weinstein - Vice President of Investor Relations Peter Faricy - Chief Executive Officer Guthrie Dundas - Interim Chief Financial Officer Conference Call Participants Sean Morgan - Evercore ISI Philip Shen - ROTH Kashy Harrison - Piper Sandler Joseph Osha - Guggenheim Corinne Blanchard - Deutsche Bank Biju Perincheril - Susquehanna Financial Pavel Molchanov - Raymond James Ned Baramov ...

SUNPOWER® February 15, 2023 4th Quarter 2022 Supplementary Slides SunPower Confidential and Proprietary | © 2023 SunPower Corporation Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) expectations regarding demand and our future performance based on bookings, backlog, demand, installations, and pipelines in our sales channels and for our products, and ...

Financial Data and Key Metrics Changes - SunPower reported $33 million of adjusted EBITDA for Q3 2022, which is 24% higher year-over-year and more than the entire first half of the year [6][17] - Non-GAAP revenue reached $470 million, marking a 67% increase year-over-year, continuing the acceleration from 63% growth in Q2 and 41% in Q1 [17] - The company holds $397 million in cash and equivalents with only $28 million of net recourse debt, indicating a strong balance sheet [18] Business Line Data and Key Metrics Changes - The company added 23,100 new customers in Q3, a 63% increase year-over-year, with revenue growing at 67% year-over-year [7][17] - Adjusted EBITDA per customer increased to $2,100 before Platform Investment, with expectations to meet the full-year guidance of $2,000 to $2,400 [8][19] - SunVault energy storage system sales benefited from higher pricing, although the bookings attach rate in the SunPower Direct channel decreased to 17% [8] Market Data and Key Metrics Changes - New Home installations increased by 22% year-over-year, with a backlog of 33,600 homes [9] - Utility bill inflation accelerated to 14.3% year-over-year, with 11 states experiencing increases greater than 20% [10] - The Inflation Reduction Act is expected to enhance the value proposition of residential solar, making it more attractive to consumers [10] Company Strategy and Development Direction - SunPower aims to build the world's best residential solar company, focusing on customer experience, product quality, and attractive financing options [6][16] - The company has established a partnership with General Motors to become the preferred installation partner for EV charging equipment, which is expected to drive solar adoption among EV owners [11][12] - SunPower is working to enhance its supply chain and has initiated discussions with multiple suppliers to secure a diverse portfolio of solar modules for 2023 and 2024 [14][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the revised guidance for California solar customers, citing rising utility prices and increased incentives from the Inflation Reduction Act [25][26] - The company is confident in achieving its full-year guidance, with strong customer growth and a healthy backlog heading into Q4 [17][19] - Management noted that the current economic conditions are favorable for solar adoption, driven by rising utility costs and federal incentives [10][23] Other Important Information - SunPower's adjusted non-GAAP gross margin remained above 20%, as higher costs were passed along in pricing [18] - The company is focused on improving customer acquisition costs through partnerships and enhanced digital marketing strategies [30][31] - SunPower is positioned to benefit from the IRA's incentives, which are expected to make leasing and PPA options more attractive to consumers [36] Q&A Session Summary Question: Update on California NEM proposal timing - Management believes oral arguments will take place soon, with cautious optimism for improved guidance for California solar customers compared to previous proposals [25][26] Question: Full year customer guidance and Q4 expectations - Management acknowledged that the customer guidance is conservative and expects to be at the high end or above the range for customers and revenue [28] Question: Digital customer acquisition progress - Management discussed partnerships with brands like IKEA and General Motors to improve customer acquisition efficiency and reduce costs [30][31] Question: Impact of IRA on ITC benefits - Management indicated that it is premature to provide specifics on ITC adders, as the U.S. government is still defining qualifying criteria [34] Question: Energy storage attach rates - Management noted that while sales of SunVault are increasing, the attach rate has flattened, but they expect future opportunities to sell more batteries to existing customers [39] Question: Expansion into new geographies - Management stated that they have the highest coverage rate among residential solar companies in the U.S. and will focus on deepening relationships in underrepresented communities [43] Question: Tax equity capacity and financing - Management expressed confidence in their tax equity supply and ongoing discussions to increase capacity for the lease business [50] Question: 2023 outlook and financing mix - Management indicated that while it is early for detailed guidance, they expect a balanced growth between lease and loan segments, with leases likely growing faster due to IRA incentives [52][54]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) This section provides SunPower Corporation's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended July 3, 2022 [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents SunPower Corporation's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), equity, and cash flows, for the quarterly period ended July 3, 2022 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and equity | Metric (in thousands) | July 3, 2022 | January 2, 2022 | | :-------------------- | :----------- | :-------------- | | **Assets** | | | | Total Current Assets | $1,071,587 | $1,073,466 | | Total Assets | $1,536,472 | $1,554,806 | | **Liabilities & Equity** | | | | Total Current Liabilities | $903,091 | $509,596 | | Total Liabilities | $1,117,381 | $1,164,782 | | Total Equity | $419,091 | $390,024 | - Total current liabilities significantly increased from **$509.6 million to $903.1 million**, primarily due to the reclassification of **$424.3 million** in convertible debt to current portion as of July 3, 2022, and an increase in accrued liabilities and contract liabilities[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net income or loss over specific periods | Metric (in thousands) | Three Months Ended July 3, 2022 | Three Months Ended July 4, 2021 | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Total Revenues | $417,772 | $260,751 | $768,049 | $500,887 | | Gross Profit | $81,499 | $60,711 | $153,808 | $106,677 | | Operating (Loss) Income | $(17,961) | $13,181 | $(28,551) | $11,803 | | Net (Loss) Income | $(62,327) | $74,769 | $(90,787) | $25,271 | | Net (Loss) Income per Share – Basic | $(0.36) | $0.43 | $(0.53) | $0.15 | - The company reported a significant **net loss of $62.3 million** for the three months ended July 3, 2022, compared to a **net income of $74.8 million** in the prior year, and a **net loss of $90.8 million** for the six months, compared to a **net income of $25.3 million** in the prior year, largely driven by operating losses and other expenses, net, which included a loss on equity investments[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents the total comprehensive income or loss, including net income and other comprehensive income items | Metric (in thousands) | Three Months Ended July 3, 2022 | Three Months Ended July 4, 2021 | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net (Loss) Income | $(62,327) | $74,769 | $(90,787) | $25,271 | | Total Other Comprehensive (Loss) Income | $(31) | $492 | $(29) | $590 | | Total Comprehensive (Loss) Income | $(62,358) | $75,261 | $(90,816) | $25,861 | - Total comprehensive loss for the three and six months ended July 3, 2022, was **$(62.4) million** and **$(90.8) million**, respectively, a significant decline from comprehensive income in the prior year, primarily reflecting the net loss[15](index=15&type=chunk) [Condensed Consolidated Statements of Equity](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section details changes in the company's equity, including contributions, distributions, and net income or loss | Metric (in thousands) | January 2, 2022 | July 3, 2022 | | :-------------------- | :-------------- | :----------- | | Total Stockholders' Equity | $388,389 | $413,317 | | Noncontrolling Interests | $1,635 | $5,774 | | Total Equity | $390,024 | $419,091 | - Total equity increased from **$390.0 million** at January 2, 2022, to **$419.1 million** at July 3, 2022, largely due to a **$114.4 million** gain on the sale of the C&I Solutions business recorded in additional paid-in capital, partially offset by a **net loss of $90.8 million**[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities | Metric (in thousands) | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :-------------------- | :---------------------------- | :---------------------------- | | Net Cash Used in Operating Activities | $(164,577) | $(18,353) | | Net Cash Provided by Investing Activities | $252,087 | $7,363 | | Net Cash Used in Financing Activities | $(7,474) | $(84,187) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $80,036 | $(95,177) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $228,649 | $151,627 | - Net cash used in operating activities significantly increased to **$164.6 million** for the six months ended July 3, 2022, from **$18.4 million** in the prior year, offset by a substantial increase in net cash provided by investing activities to **$252.1 million**, primarily from the sale of the C&I Solutions business and equity investments[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=15&type=section&id=Note%201.%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes SunPower Corporation's business, recent strategic shifts, and key accounting principles applied - SunPower Corporation is a leading solar technology and energy services provider, primarily serving residential customers in the U.S. and Canada with integrated solar, storage, and home energy solutions[27](index=27&type=chunk) - The company completed the sale of its Commercial and Industrial Solutions (C&I Solutions) business on May 31, 2022, for a preliminary purchase price of **$190.0 million**, resulting in a strategic shift to a single operating segment focused on residential customers[28](index=28&type=chunk)[35](index=35&type=chunk) - Management believes current cash and cash equivalents, along with potential proceeds from Enphase Energy, Inc. stock sales and operational cash generation, will be sufficient to meet obligations over the next 12 months, including the **$425.0 million** 4.00% senior convertible debentures due 2023[29](index=29&type=chunk)[234](index=234&type=chunk) - The company launched SunPower Financial in Q4 2021 to offer long-term retail installment contracts (typically 20-25 years) for solar power system purchases, recognizing revenue upon system installation and final permit, with a significant financing component deferred and recognized over the contract term[38](index=38&type=chunk) [Note 2. DISCONTINUED OPERATIONS](index=17&type=section&id=Note%202.%20DISCONTINUED%20OPERATIONS) This note details the financial impact and strategic implications of the C&I Solutions business divestiture - The sale of the C&I Solutions business to TotalEnergies Renewables, a common control transaction, closed on May 31, 2022, yielding net cash consideration of **$149.2 million**, with a gain of **$118.3 million** recorded primarily in additional paid-in capital[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) - Transaction costs of **$8.3 million** and **$10.6 million** were incurred for the three and six months ended July 3, 2022, respectively, and expensed within 'loss from discontinued operations before income taxes'[44](index=44&type=chunk) Discontinued Operations Financials | Metric (in thousands) | Three Months Ended July 3, 2022 | Six Months Ended July 3, 2022 | | :-------------------- | :------------------------------ | :---------------------------- | | Total Revenues | $8,256 | $36,710 | | Gross (Loss) Profit | $(6,574) | $(23,150) | | Net (Loss) Income from Discontinued Operations, net of taxes | $(20,616) | $(46,571) | [Note 3. TRANSACTIONS WITH TOTAL AND TOTALENERGIES SE](index=20&type=section&id=Note%203.%20TRANSACTIONS%20WITH%20TOTAL%20AND%20TOTALENERGIES%20SE) This note describes the company's relationship and financial transactions with its majority shareholder, TotalEnergies SE - TotalEnergies SE and its affiliates hold approximately **51% ownership** of SunPower's outstanding common stock as of July 3, 2022[52](index=52&type=chunk) - TotalEnergies SE announced an agreement to acquire **50%** of Clearway Energy Group from Global Infrastructure Partners, with consideration including a **50% minus one share interest** in the TotalEnergies subsidiary holding SunPower's common stock, expected to close in late fiscal 2022[53](index=53&type=chunk) - The Affiliation Agreement with Total imposes restrictions on Total's ownership thresholds and certain corporate actions, while also granting Total the right to maintain its percentage ownership in new securities issuances[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - SunPower's obligations under the Strategic Cooperation Framework Agreement with Total were transferred to TotalEnergies Renewables following the sale of the C&I Solutions business[59](index=59&type=chunk) - Total holds **$100.0 million** of SunPower's **$425.0 million** 4.00% debentures due 2023, which are convertible into common stock at a rate of **40.1552 shares per $1,000 principal amount** and mature on January 15, 2023[61](index=61&type=chunk) [Note 4. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=23&type=section&id=Note%204.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) This note details the breakdown of revenue by category and the aggregate transaction price from customer contracts Revenue by Category | Revenue Category (in thousands) | Three Months Ended July 3, 2022 | Three Months Ended July 4, 2021 | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Solar power systems sales | $320,294 | $172,837 | $591,938 | $339,164 | | Component sales | $74,542 | $56,656 | $134,419 | $107,388 | | Light commercial sales | $24,569 | $19,107 | $38,765 | $34,825 | | Services and other | $(1,633) | $12,151 | $2,927 | $19,510 | | Total revenues | $417,772 | $260,751 | $768,049 | $500,887 | - Total revenues increased by **60%** (QoQ) and **53%** (YoY) driven by higher volume in organic residential business and the Blue Raven acquisition, partially offset by a reduction in 'services and other' revenue due to the reversal of variable consideration on legacy power plant projects[67](index=67&type=chunk)[196](index=196&type=chunk) - As of July 3, 2022, the company has **$817.9 million** in aggregate transaction price from contracts with customers, with the majority expected to be recognized within the next 12 months[69](index=69&type=chunk) [Note 5. BALANCE SHEET COMPONENTS](index=24&type=section&id=Note%205.%20BALANCE%20SHEET%20COMPONENTS) This note provides a detailed breakdown of specific asset and liability accounts on the balance sheet Selected Balance Sheet Accounts | Metric (in thousands) | July 3, 2022 | January 2, 2022 | | :-------------------- | :----------- | :-------------- | | Accounts Receivable, net | $149,166 | $121,268 | | Inventories | $222,524 | $214,432 | | Prepaid Expenses and Other Current Assets | $166,364 | $100,212 | | Property, Plant and Equipment, net | $50,675 | $33,560 | | Other Long-term Assets | $169,882 | $156,994 | | Accrued Liabilities | $155,273 | $101,980 | | Other Long-term Liabilities | $117,942 | $141,197 | - Accounts receivable, net, increased by **$27.9 million**, and prepaid expenses and other current assets increased by **$66.2 million**, reflecting growth in operations and deferred project costs, while property, plant, and equipment, net, also increased by **$17.1 million**[71](index=71&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - Accrued liabilities rose by **$53.3 million**, primarily due to increases in employee compensation, short-term warranty reserves, and a **$6.3 million** payable to Total related to the C&I Solutions sale, while other long-term liabilities decreased by **$23.3 million**[79](index=79&type=chunk)[80](index=80&type=chunk) [Note 6. GOODWILL AND INTANGIBLE ASSETS](index=26&type=section&id=Note%206.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) This note details the company's goodwill and intangible assets, including their sources and amortization - Goodwill of **$126.3 million** as of July 3, 2022, resulted from the acquisition of Blue Raven Solar Holdings, LLC in Q4 2021[82](index=82&type=chunk) Intangible Assets | Intangible Asset (in thousands) | Gross Carrying Amount (July 3, 2022) | Net Book Value (July 3, 2022) | | :------------------------------ | :----------------------------------- | :---------------------------- | | Developed technology | $3,700 | $2,775 | | Brand | $15,800 | $12,837 | | Non-compete agreements | $3,400 | $2,550 | | Software development costs | $6,286 | $6,239 | | Total | $29,186 | $24,401 | - Aggregate amortization expense for intangible assets was **$1.6 million** and **$3.2 million** for the three and six months ended July 3, 2022, respectively, with no impairment loss recorded[86](index=86&type=chunk) [Note 7. FAIR VALUE MEASUREMENTS](index=27&type=section&id=Note%207.%20FAIR%20VALUE%20MEASUREMENTS) This note provides information on assets and liabilities measured at fair value, including valuation methodologies and inputs Fair Value of Assets | Asset (in thousands) | Total Fair Value (July 3, 2022) | Level 3 (July 3, 2022) | Level 1 (July 3, 2022) | | :------------------- | :------------------------------ | :--------------------- | :--------------------- | | Equity investments with FVO | $11,692 | $11,692 | — | | Equity investments with readily determinable fair value | $293,580 | — | $293,580 | | Total assets | $305,272 | $11,692 | $293,580 | - Equity investments with fair value option (FVO), primarily in joint ventures like SunStrong Capital Holdings, LLC and Dorado Development Partners, LLC, are classified as Level 3 due to significant unobservable inputs (discount rate, residual value) in their valuation[92](index=92&type=chunk)[96](index=96&type=chunk) - The company recorded a **loss of $15.2 million** and **$13.9 million** for the three and six months ended July 3, 2022, respectively, on equity investments with readily determinable fair value (Enphase common stock), compared to gains in the prior year, with **1 million shares** of Enphase stock sold for **$149.8 million** cash proceeds[97](index=97&type=chunk) - Retail installment contract receivables, net, had a carrying value of **$100.5 million** and a fair value of **$80.2 million** as of July 3, 2022, with fair value determined using Level 2 inputs based on market-indexed pricing[98](index=98&type=chunk) [Note 8. RESTRUCTURING](index=29&type=section&id=Note%208.%20RESTRUCTURING) This note outlines the company's restructuring plans, associated costs, and their current status - The January 2021 restructuring plan, related to the closure of the Hillsboro, Oregon manufacturing facility, is substantially completed, with cumulative costs of approximately **$3.3 million** incurred as of July 3, 2022[99](index=99&type=chunk)[102](index=102&type=chunk) - The December 2019 restructuring plan, initiated to optimize workforce requirements following the Spin-Off, was completed during Q2 2022, with cumulative costs of approximately **$6.1 million**[103](index=103&type=chunk) Restructuring Charges (Credits) | Restructuring Plan (in thousands) | Three Months Ended July 3, 2022 | Six Months Ended July 3, 2022 | | :-------------------------------- | :------------------------------ | :---------------------------- | | January 2021 Restructuring Plan | $(303) | $(265) | | December 2019 Restructuring Plan | $(236) | $(53) | | Other restructuring | $45 | $451 | | Total Restructuring Charges (Credits) | $(494) | $133 | - Restructuring credits in Q2 2022 primarily resulted from employee transfers to Maxeon Solar due to an amendment to the cross license agreement, while six-month charges included severance for exiting the Light Commercial business[107](index=107&type=chunk)[205](index=205&type=chunk) [Note 9. COMMITMENTS AND CONTINGENCIES](index=31&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES) This note details the company's lease obligations, purchase commitments, warranty liabilities, and legal matters Lease Expenses | Lease Metric (in thousands) | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :-------------------------- | :---------------------------- | :---------------------------- | | Operating and finance lease expense | $6,888 | $6,817 | | Sublease income | $(191) | $(211) | | Rent expense | $6,697 | $6,606 | | Cash paid for operating and finance leases | $4,652 | $8,001 | - Future minimum lease payments under non-cancellable operating leases total **$45.4 million** as of July 3, 2022, with **$7.5 million** due in the remaining six months of 2022[116](index=116&type=chunk) - Future purchase obligations under non-cancellable agreements amount to **$338.7 million** as of July 3, 2022, primarily for photovoltaic modules from Maxeon Solar and MLPEs from another vendor, with a new Master Supply Agreement with Maxeon Solar effective in Q1 2022[117](index=117&type=chunk) Warranty Activity | Warranty Metric (in thousands) | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :----------------------------- | :---------------------------- | :---------------------------- | | Balance at beginning of period | $80,282 | $62,801 | | Accruals for warranties issued | $3,866 | $9,675 | | Settlements and adjustments | $(5,564) | $(13,058) | | Balance at end of period | $78,584 | $59,418 | - The company recorded a one-time quality charge of **$26.5 million** in fiscal 2021 for a cracking issue, with repairs expected to be completed through fiscal 2023, and no significant changes to this estimate occurred in Q1/Q2 2022[122](index=122&type=chunk) - Liabilities for uncertain tax positions totaled **$15.4 million** as of July 3, 2022, an increase of **$0.7 million** from January 2, 2022, primarily due to interest, penalties, and foreign exchange rate changes[123](index=123&type=chunk)[172](index=172&type=chunk) - SunPower is contractually liable for certain obligations under Hemlock Agreements, but is fully indemnified by Maxeon Solar under a Back-to-Back Agreement, with ongoing discussions regarding alleged inflationary price escalation clauses[127](index=127&type=chunk)[128](index=128&type=chunk) - A liability of **$6.3 million** was recorded for litigation indemnity provided to Maxeon Solar, including a **$2.0 million** change in fair value for a settled matter[129](index=129&type=chunk) [Note 10. EQUITY INVESTMENTS](index=35&type=section&id=Note%2010.%20EQUITY%20INVESTMENTS) This note provides details on the company's equity investments, including their fair value and contributions to joint ventures Equity Investments | Equity Investment Category (in thousands) | July 3, 2022 | January 2, 2022 | | :---------------------------------------- | :----------- | :-------------- | | Equity investments with readily determinable fair value (Enphase) | $293,580 | $457,352 | | Equity investments without readily determinable fair value | $17,392 | $807 | | Equity investments with fair value option | $11,692 | $8,374 | | Total equity investments | $322,664 | $466,533 | - New equity investments in Q1/Q2 2022 include **$5.0 million** in OhmConnect, Inc. (**1.8% interest**), **$2.0 million** in Sea Bright Solar, Inc. (**20% interest**, equity method), and **$9.4 million** in Freedom Solar Holdings, LLC (**4.5% interest**, equity method)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - SunPower entered a joint venture with Hannon Armstrong and SunStrong to form Dorado DevCo in March 2022 for residential lease solar power projects, with SunPower contributing **$3.3 million** in capital for the six months ended July 3, 2022[139](index=139&type=chunk)[141](index=141&type=chunk) - SunStrong, a significant unconsolidated VIE, reported revenues of **$72.2 million** and a **net income of $8.8 million** for the six months ended July 3, 2022[143](index=143&type=chunk) - Revenues and fees received from investees for products/services decreased to **$86.6 million** for the six months ended July 3, 2022, from **$100.1 million** in the prior year[148](index=148&type=chunk) [Note 11. DEBT AND CREDIT SOURCES](index=38&type=section&id=Note%2011.%20DEBT%20AND%20CREDIT%20SOURCES) This note provides a comprehensive overview of the company's debt obligations and available credit facilities Debt and Credit Sources | Debt Type (in thousands) | Face Value (July 3, 2022) | Short-term (July 3, 2022) | Long-term (July 3, 2022) | | :----------------------- | :------------------------ | :------------------------ | :----------------------- | | 4.00% convertible debentures due 2023 | $424,991 | $424,298 | — | | Asset-Backed Loan | $61,687 | $61,649 | — | | Safe Harbor Loan | $0 | $0 | — | | Credit Suisse Warehouse Loan | $55,656 | — | $53,798 | | Vendor Financing and Other Debt | $772 | $441 | $331 | | Total | $543,106 | $486,388 | $54,129 | - The **$425.0 million** 4.00% convertible debentures due 2023 are now classified as current portion, with a carrying value of **$424.3 million** and a fair value of **$454.7 million** as of July 3, 2022[152](index=152&type=chunk)[156](index=156&type=chunk) - SunPower repaid the remaining **$47.6 million** Safe Harbor loan with Hannon Armstrong in June 2022[153](index=153&type=chunk) - A new **$100.0 million** delayed draw term loan facility was entered into with Credit Suisse AG on June 30, 2022, to finance retail installment contract receivables, with **$55.7 million** outstanding as of July 3, 2022[160](index=160&type=chunk)[161](index=161&type=chunk) - The company has letter of credit facilities with Deutsche Bank Trust (up to **$200.0 million**, fully cash-collateralized) and Bank of the West (up to **$25.0 million**, **50%** cash-secured), with **$22.0 million** outstanding under the Bank of the West facility and none under Deutsche Bank as of July 3, 2022[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Note 12. RELATED-PARTY TRANSACTIONS](index=40&type=section&id=Note%2012.%20RELATED-PARTY%20TRANSACTIONS) This note outlines significant transactions and agreements with related parties, including Maxeon Solar - SunPower entered into a First Amendment to the Cross License Agreement with Maxeon Solar in Q2 2022, adjusting the scope of Maxeon Solar's non-exclusive license and settling certain payments[164](index=164&type=chunk) - A **net loss of $4.3 million** was recorded in Q2 2022 related to these agreements, impacting research and development and sales, general, and administrative expenses[165](index=165&type=chunk) Related-Party Transactions | Transaction (in thousands) | Three Months Ended July 3, 2022 | Six Months Ended July 3, 2022 | | :------------------------- | :------------------------------ | :---------------------------- | | Purchases of photo-voltaic modules | $62,602 | $135,061 | | Research and development expenses reimbursement received | $8,061 | $17,535 | | Income (expense) from transition services agreement, net | $(24) | $(290) | [Note 13. INCOME TAXES](index=40&type=section&id=Note%2013.%20INCOME%20TAXES) This note provides details on the company's income tax provision or benefit and uncertain tax positions - For the three months ended July 3, 2022, an income tax provision of **$3.2 million** was recorded on a pre-tax loss of **$38.5 million**, primarily due to changes in the forecasted annual effective tax rate and mark-to-market unrealized losses on equity investments[168](index=168&type=chunk)[214](index=214&type=chunk) - For the six months ended July 3, 2022, an income tax benefit of **$8.4 million** was recorded on a pre-tax loss of **$52.6 million**, mainly due to the reversal of deferred taxes for California following the enactment of Senate Bill 113, which restored the ability to utilize net operating losses[169](index=169&type=chunk)[215](index=215&type=chunk) - The sale of the C&I Solutions business resulted in a taxable gain, with a **$1.4 million** tax impact recorded in 'additional paid-in capital'[171](index=171&type=chunk) [Note 14. NET INCOME (LOSS) PER SHARE](index=41&type=section&id=Note%2014.%20NET%20INCOME%20(LOSS)%20PER%20SHARE) This note presents the basic and diluted net income or loss per share calculations and related factors Earnings Per Share | EPS Metric | Three Months Ended July 3, 2022 | Three Months Ended July 4, 2021 | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :--------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Basic Net (Loss) Income per Share | $(0.36) | $0.43 | $(0.53) | $0.15 | | Diluted Net (Loss) Income per Share | $(0.36) | $0.39 | $(0.53) | $0.15 | - Basic and diluted net loss per share were **$(0.36)** for the three months and **$(0.53)** for the six months ended July 3, 2022, a significant decrease from positive EPS in the prior year periods[177](index=177&type=chunk) - Anti-dilutive potential common stock excluded from diluted EPS calculations for the three and six months ended July 3, 2022, included **17.1 million shares** from 4.00% debentures due 2023 and **3.4 million** restricted stock units[180](index=180&type=chunk) [Note 15. STOCK-BASED COMPENSATION](index=43&type=section&id=Note%2015.%20STOCK-BASED%20COMPENSATION) This note details the company's stock-based compensation expense across various categories Stock-Based Compensation Expense | Expense Category (in thousands) | Three Months Ended July 3, 2022 | Three Months Ended July 4, 2021 | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :------------------------------ | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Cost of revenues | $1,395 | $698 | $2,350 | $1,282 | | Research and development | $270 | $1,441 | $839 | $1,799 | | Sales, general, and administrative | $5,386 | $7,115 | $9,263 | $10,524 | | Total stock-based compensation expense | $7,051 | $9,254 | $12,452 | $13,605 | - Total stock-based compensation expense decreased by **$2.2 million** for the three months and **$1.2 million** for the six months ended July 3, 2022, compared to the prior year periods[182](index=182&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on SunPower's financial condition and results of operations for the period ended July 3, 2022 [Cautionary Statement Regarding Forward-Looking Statements](index=43&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements regarding future financial results, business strategies, liquidity, costs, product development, supply chain, inflation, regulatory compliance, and other factors, which are subject to risks and uncertainties that could cause actual results to differ materially[186](index=186&type=chunk) [Overview](index=44&type=section&id=Overview) This section provides a high-level summary of SunPower's business model and strategic focus - SunPower is a leading solar technology and energy services provider, offering integrated solar, storage, and home energy solutions primarily to residential customers in the U.S. and Canada, with its 'Smart Energy' initiative aiming to add intelligent control to homes and grids[188](index=188&type=chunk) - Following the classification of the C&I Solutions business as discontinued operations, SunPower now operates in a single segment focused on residential customers[188](index=188&type=chunk) [Key Developments](index=45&type=section&id=Key%20Developments) This section highlights significant events and strategic actions undertaken by the company during the reporting period - The sale of the Commercial and Industrial Solutions (C&I Solutions) business to TotalEnergies Renewables USA, LLC closed on May 31, 2022, for a preliminary purchase price of **$190.0 million**, with net cash consideration of **$149.2 million** received[190](index=190&type=chunk) - SunPower published its fiscal 2021 Environmental, Social, and Governance (ESG) Report in Q2 2022, detailing its commitment to energy sustainability, waste minimization, and diversity, equity, and inclusion initiatives[191](index=191&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, gross profit, and operating expenses Financial Performance Summary | Metric (in thousands) | Three Months Ended July 3, 2022 | % of Revenues (2022) | Three Months Ended July 4, 2021 | % of Revenues (2021) | | :-------------------- | :------------------------------ | :------------------- | :------------------------------ | :------------------- | | Total Revenues | $417,772 | 100% | $260,751 | 100% | | Gross Profit | $81,499 | 20% | $60,711 | 23% | | Operating (Loss) Income | $(17,961) | (4)% | $13,181 | 5% | | Other (Expense) Income, net | $(20,524) | (5)% | $77,518 | 30% | | Net (Loss) Income from continuing operations attributable to stockholders | $(42,496) | (10)% | $87,094 | 33% | - Total revenues increased by **60%** (QoQ) and **53%** (YoY) due to higher residential business volume and the Blue Raven acquisition, partially offset by a reduction in 'services and other' revenue from legacy power plant projects[196](index=196&type=chunk) - Gross margin decreased by **3 percentage points** (QoQ) and **1 percentage point** (YoY) primarily due to inflationary cost increases exceeding pricing increases, and the revenue reduction from legacy projects[201](index=201&type=chunk) - R&D expenses increased by **74%** (QoQ) and **40%** (YoY) due to higher labor costs, increased headcount, and hiring costs[202](index=202&type=chunk) - SG&A expenses increased by **88%** (QoQ) and **85%** (YoY), driven by the Blue Raven acquisition, strategic hiring, and increased acquisition/divestiture-related transaction costs[203](index=203&type=chunk) - Other (expense) income, net, decreased significantly by **$98.7 million** (QoQ) and **$52.8 million** (YoY), primarily due to a loss on equity investments with readily determinable fair value in 2022, compared to a gain in 2021[212](index=212&type=chunk) [Critical Accounting Estimates](index=51&type=section&id=Critical%20Accounting%20Estimates) This section discusses the accounting policies that require significant judgment and estimation by management - No significant changes were made to critical accounting estimates during Q2 2022, except for the detailed disclosure on retail installment contract receivables, net[220](index=220&type=chunk) - Retail installment contracts involve long-term loans for solar system purchases, with revenue recognized upon system completion and a significant financing component deferred and amortized over the contract term[221](index=221&type=chunk)[222](index=222&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's ability to generate and manage cash, including cash flow activities and contractual obligations Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended July 3, 2022 | Six Months Ended July 4, 2021 | | :-------------------------------- | :---------------------------- | :---------------------------- | | Net cash (used in) provided by operating activities | $(164,577) | $(18,353) | | Net cash provided by (used in) investing activities | $252,087 | $7,363 | | Net cash (used in) provided by financing activities | $(7,474) | $(84,187) | - Net cash used in operating activities increased by **$146.2 million**, primarily due to a higher net loss (excluding non-cash items) and increases in accounts receivable, prepaid expenses, and inventories[226](index=226&type=chunk) - Net cash provided by investing activities increased by **$244.7 million**, mainly from the C&I Solutions sale proceeds (**$146.3 million**) and sale of equity investments (**$149.8 million**), partially offset by increased capital expenditures and new equity investments[227](index=227&type=chunk)[228](index=228&type=chunk) - Net cash used in financing activities decreased by **$76.7 million**, primarily due to higher net proceeds from bank loans and other debt, and the absence of convertible debt repayment that occurred in fiscal 2021[229](index=229&type=chunk) - Unrestricted cash and cash equivalents increased to **$206.4 million** as of July 3, 2022, from **$123.7 million** at January 2, 2022, with the company planning to use available cash, short-term equity investments, and debt for operations, capital expenditures, and M&A[230](index=230&type=chunk)[231](index=231&type=chunk) - Management believes current liquidity sources are sufficient to meet obligations for the next 12 months, including the **$425.0 million** 4.00% debentures due 2023, potentially using proceeds from Enphase stock sales and operational cash[234](index=234&type=chunk) Contractual Obligations | Contractual Obligation (in thousands) | Total | 2022 (remaining 6 months) | 2023-2024 | 2025-2026 | Beyond 2026 | | :------------------------------------ | :-------- | :------------------------ | :---------- | :-------- | :---------- | | Convertible debt, including interest | $434,199 | $8,500 | $425,699 | — | — | | Other debt, including interest | $122,968 | $63,543 | $59,168 | $158 | $99 | | Operating lease commitments | $45,370 | $7,523 | $24,862 | $10,966 | $2,019 | | Supply agreement commitments | $338,731 | $129,517 | $202,978 | $1,707 | $4,529 | | Total | $941,268 | $209,083 | $712,707 | $12,831 | $6,647 | - Liabilities associated with uncertain tax positions (**$15.4 million** as of July 3, 2022) are excluded from contractual obligations due to the inability to reliably estimate cash settlement periods[238](index=238&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=54&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses SunPower's exposure to market risks, specifically focusing on interest rate risk - SunPower is exposed to interest rate risk due to fixed-rate financing receivables from retail installment contracts, where increases in market interest rates could adversely affect the company as it has locked in lower fixed rates for these contracts, which will need to be refinanced[241](index=241&type=chunk) - The fair value of retail installment contract receivables was **$80.2 million** as of July 3, 2022, and a hypothetical **50 basis points** change in market interest rates did not have a material effect on their fair value[241](index=241&type=chunk) - Rising interest rates could also make it difficult for customers to obtain financing for solar power systems on favorable terms, impacting sales[242](index=242&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of SunPower's disclosure controls and procedures and any changes in internal control over financial reporting - The CEO and CFO concluded that SunPower's disclosure controls and procedures were effective at a reasonable assurance level as of July 3, 2022[244](index=244&type=chunk) - A new enterprise resource planning (ERP) system was implemented in Q1 2022, leading to modifications in internal control processes and procedures related to the new system, with no other material changes to internal control over financial reporting occurring[245](index=245&type=chunk) [PART II. OTHER INFORMATION](index=55&type=section&id=Part%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and exhibits filed with the report [ITEM 1. LEGAL PROCEEDINGS](index=55&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to the disclosures on legal matters within the Notes to Condensed Consolidated Financial Statements - Information on legal proceedings is incorporated by reference from Note 9, 'Commitments and Contingencies—Legal Matters,' in the financial statements[248](index=248&type=chunk) [ITEM 1A. RISK FACTORS](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in prior reports - No material changes to previously disclosed risk factors were identified since the Annual Report on Form 10-K for January 2, 2022, and the Quarterly Report on Form 10-Q for April 3, 2022[249](index=249&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's purchases of its own equity securities, specifically shares surrendered by employees for tax obligations Shares Purchased | Period | Total Number of Shares Purchased | Average Price Per Share | | :-------------------------- | :------------------------------- | :---------------------- | | April 4, 2022 – May 1, 2022 | 9,769 | $23.48 | | May 2, 2022 – May 29, 2022 | 29,368 | $18.08 | | May 30, 2022 – July 3, 2022 | 84,428 | $17.71 | | Total | 123,565 | | - The shares purchased represent shares surrendered by employees to satisfy tax withholding obligations on vested restricted stock[251](index=251&type=chunk) [ITEM 6. EXHIBITS](index=56&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Quarterly Report on Form 10-Q - The exhibits include a Letter Agreement related to the C&I Solutions sale, an Amendment to the Cross License Agreement with Maxeon Solar, an Amendment to Securities Purchase Agreement, and an Amendment to Master Supply Agreement with Enphase Energy, Inc[253](index=253&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer, as well as XBRL taxonomy documents, are also filed[253](index=253&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) This section contains the signature of the authorized officer, Manavendra S. Sial, Executive Vice President and Chief Financial Officer, certifying the filing of the report - The report was signed by Manavendra S. Sial, Executive Vice President and Chief Financial Officer, on August 2, 2022[256](index=256&type=chunk)

SunPower Corporation. (NASDAQ:SPWR) Q2 2022 Earnings Conference Call August 2, 2022 8:30 AM ET Company Participants Mike Weinstein - Vice President-Investor Relations Peter Faricy - Chief Executive Officer Manu Sial - Chief Financial Officer Conference Call Participants Sean Morgan - Evercore ISI Ben Kallo - Baird Pavel Molchanov - Raymond James Morgan Kaplan - Bank of America Kashy Harrison - Piper Sandler Colin Rusch - Oppenheimer Mark Strauss - JPMorgan Operator Good day and thank you for standing by. We ...