PowerSchool Holdings Inc
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Consumer Discretionary : Diversified Consumer Services | Small Cap Growth
Company profile

PowerSchool Holdings, Inc. is a provider of cloud-based software for K-12 education. The Company connects students, teachers, administrators, and parents to improve student outcomes. The Company's cloud platform is an integrated, enterprise-scale suite of solutions purpose-built for the K-12 education market. The Company's platform is embedded in school workflows and is used by educators, students, administrators, and parents. The Company's cloud-based technology platform helps schools and districts manage state reporting and related compliance, special education, finance, human resources, talent, registration, attendance, funding, learning, instruction, grading, assessments, and analytics in one unified platform. The Company's integrated technology approach streamlines operations, aggregates disparate data sets, and develops insights using predictive modelling and machine learning. The Company serves more than 14,000 customers by student enrolment in the United States.

Closing Price
$17.27
Day's Change
0.00 (0.00%)
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--
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Day's High
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Volume
(Light)
Volume:
259,061

10-day average volume:
438,911
259,061

SunPower Reports Second Quarter 2022 Results

8:05 am ET August 2, 2022 (PR Newswire) Print

-- Added a record 19,700 customers in the second quarter, a 51% increase YoY

-- Accelerated revenue growth to 63% YoY

-- Achieved backlog of 53,000 retrofit and new homes customers

-- Delivered strong gross margin: 20% GAAP, 21% non-GAAP

-- Announced strategic relationship with IKEA U.S. to reach new customers and simplify the solar buying experience

SunPower Corp. (NASDAQ:SPWR), a leading solar technology and energy services provider, today announced financial results for the second quarter, ending July 3, 2022.

https://mma.prnewswire.com/media/479475/SunPower_Corp___Logo.jpg

"There is a ubiquitous need for reliable electricity at an affordable price that isn't being met with our traditional energy sources," said Peter Faricy, SunPower CEO. "With our strategic growth plan, investment in world-class customer experience and robust pipeline, SunPower is well positioned to capture the strong resulting demand for solar and storage. This quarter we added a record number of customers, including an all-time high for new homes installs, and accumulated a backlog that we expect to set us up for high growth in the second half of the year."

SECOND QUARTER BUSINESS HIGHLIGHTS

SunPower continues to execute across its five strategic pillars to capture demand and cement its leadership position as the company delivering the most innovative ecosystem of home energy products with unmatched customer experience.

World-class customer experience
1.              Highest rated solar company: In the second quarter of 2022, SunPower remained the only 4+ star rated solar provider in the U.S. with an average review score of 4.3. SunPower's Net Promoter Score improved to 51, a 38% improvement year-over-year (YoY).
2.              Improved time to resolution: The company continued its trend of significantly improving customer response speed. In the last quarter, it minimized wait times to 31 seconds, a 45% improvement YoY, and shortened the average time it takes to resolve a customer query by 36% YoY.
Best, most affordable products
3.              Significant progress on ground-breaking panel: SunPower and First Solar (NASDAQ: FSLR) are finalizing negotiations to develop the world's most-advanced residential solar panels. The companies have agreed on the majority of key terms and are working toward definitive agreements. They are expected to sign a deal in the next quarter and promptly move forward to operationalize production.
4.              Increasing panel supply: SunPower secured additional product volume under their agreement with Maxeon Solar Technologies (NASDAQ: MAXN) for increased panel supply through the end of the year. Along with additional supply chain agreements, this further ensures the company's ability to meet unprecedented demand.
Growth
5.              Joining forces with IKEA U.S.: In May, SunPower announced a new strategic relationship with IKEA U.S. to introduce solar and storage to a new consumer market and make renewable energy easier to access. Through the collaboration, SunPower home energy products will be featured in select IKEA stores, and members of IKEA's customer loyalty program will be able to initiate their solar journey from the showroom floor. Home Solar with IKEA is expected to launch in select California markets in Fall 2022.
6.              Driving growth in new homes: SunPower continues to stand out as an industry leader in new homes. It recorded a 46% increase YoY for contracted active solar-standard communities, with previously sold backlog growing to 34,0001 customers. This quarter, the company further expanded its category presence across the country: it solidified a multiyear national contract extension with KB Home (NYSE: KBH) and finalized a deal with Dream Finders Homes (NASDAQ: DFH) to build nearly 400 solar-standard homes across five communities in Colorado.
Digital innovation
7.              Completed significant monitoring upgrade: SunPower finalized a multiyear project to redesign its monitoring systems for a superior customer experience. The new system enables faster load times and activates features such as panel-level monitoring and alerts for customers and dealers. With the implementation, SunPower reduced maximum delay time between when panels measure power production and when that data is visible in the mySunPower app from one hour to less than two minutes. The new monitoring system is expected to save SunPower more than $4 million in annual operating costs by gaining efficiency and reducing third party vendor fees.
World-class financial solutions
8.              Grew financing product portfolio: SunPower Financial introduced several new offerings in the second quarter to help keep customers' monthly payments low, including low-APR loans and expanded eligibility up to $150,000.
1Backlog calculated as of July 22, 2022.

In June, SunPower closed the sale of its Commercial & Industrial Solutions (CIS) business to TotalEnergies. Additionally in the second quarter, TotalEnergies and Global Infrastructure Partners (GIP) signed a deal where GIP is expected to acquire an approximate 50% interest in a new joint venture that will hold TotalEnergies' 51% ownership in SunPower Corporation.

"This agreement is a strong signal from energy leaders and investors that accelerating the energy transition is an imperative and a powerful vote of confidence that SunPower is well suited to play a leading role in that change," said Faricy.

Financial Highlights

($ Millions, except percentages, residential           2nd Quarter 2022 1st Quarter 2022 2nd Quarter 2021
customers, and per-share data)
GAAP revenue from continuing operations                $417.8           $350.3           $260.8
GAAP gross margin from continuing operations           19.5 %           20.6 %           23.3 %
GAAP net income (loss) from continuing operations      $(42.5)          $(2.2)           $87.1
GAAP net income (loss) from continuing operations      $(0.24)          $(0.01)          $0.46
per diluted share
Non-GAAP revenue from continuing operations1           $414.1           $336.1           $254.1
Non-GAAP gross margin from continuing operations1      21.3 %           21.7 %           22.5 %
Non-GAAP net income (loss) from continuing operations1 $5.2             $2.9             $12.1
Non-GAAP net income (loss) from continuing             $0.03            $0.02            $0.07
operations per diluted share1
Adjusted EBITDA1                                       $15.2            $11.2            $22.4
Residential customers                                  463,600          443,800          363,000
Cash2                                                  $206.4           $142.3           $209.8
The sale of our C&I Solutions business met the criteria for classification as "discontinued operations" in accordance with the guidance in ASC 205-20, Discontinued Operations, beginning the first quarter of fiscal 2022. For all periods presented, the financial results of C&I Solutions are excluded in the table above.
1Information about SunPower's use of non-GAAP financial information, including a reconciliation to U.S. GAAP, is provided under "Use of Non-GAAP Financial Measures" below.
2Includes cash and cash equivalents, excluding restricted cash

2022 Financial Outlook SunPower affirmed prior 2022 guidance of $2,000-$2,400 Adjusted EBITDA per customer and 73,000-80,000 incremental customers, resulting in $90-$110 million Adjusted EBITDA for the year.

Earnings Conference Call Information

SunPower will discuss its second quarter, 2022 financial results on Tuesday, August 2 at 8:30 a.m. Eastern Time. The conference call can be accessed live by registering at https://register.vevent.com/register/BI8045a492c8dd47d6be8faf25537fcfbd. The live audio webcast and supplemental financial information will be available on SunPower's investor website at http://investors.sunpower.com/events.cfm.

About SunPower SunPower (NASDAQ:SPWR) is a leading solar technology and energy services provider in North America. SunPower offers the only solar + storage solution designed and warranted by one company that gives customers control over electricity consumption and resiliency during power outages. For more information, visit www.sunpower.com.

Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding: (a) expectations regarding demand and our future performance based on backlog, bookings, projected consumer demand, and pipelines in our sales channels and for our products, and our ability to meet consumer demand; (b) our plans and expectations with respect to our strategic partnerships and initiatives, including our proposed partnership with First Solar, our strategic relationship with IKEA, and our agreements with KB Home and Dream Finders Homes, and the anticipated business and financial impacts thereof; (c) our strategic plans and areas of investment and focus, both current and future, and expectations for the results thereof, including improved customer experience, increased installation capacity, development of new products and services, and cost savings; (d) our expectations regarding projected demand and growth in 2022 and beyond, our positioning for future success, and our ability to capture demand and deliver long-term value to our shareholders; (e) our expectations for industry trends and factors, and the impact thereof on our business and strategic plans; and (f) our guidance for fiscal year 2022, including Adjusted EBITDA per customer, incremental customers, and Adjusted EBITDA, and related assumptions.

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

(C)2022 SunPower Corporation. All rights reserved. SUNPOWER, SUNPOWER FINANCIAL, SUNVAULT, and the SUNPOWER logo are trademarks or registered trademarks of SunPower Corporation in the U.S.

SUNPOWER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                             July 3, 2022                  January 3, 2021
Assets
Current assets:
Cash and cash equivalents                                    $                    206,355  $                    123,735
Restricted cash and cash equivalents, current portion        1,024                         691
Short-term investments                                       293,580                       365,880
Accounts receivable, net                                     149,166                       121,268
Contract assets                                              30,358                        25,994
Inventories                                                  222,524                       214,432
Advances to suppliers, current portion                       2,216                         462
Prepaid expenses and other current assets                    166,364                       100,212
Current assets of discontinued operations                    --                            120,792
Total current assets                                         1,071,587                     1,073,466
Restricted cash and cash equivalents, net of current portion 21,270                        14,887
Property, plant and equipment, net                           50,675                        33,560
Operating lease right-of-use assets                          28,809                        31,654
Solar power systems leased, net                              43,510                        45,502
Goodwill                                                     126,338                       126,338
Other intangible assets, net                                 24,401                        24,879
Other long-term assets                                       169,882                       156,994
Long-term assets of discontinued operations                  --                            47,526
Total assets                                                 $                 1,536,472   $                 1,554,806
Liabilities and Equity
Current liabilities:
Accounts payable                                             $                    148,147  $                    138,514
Accrued liabilities                                          155,273                       101,980
Operating lease liabilities, current portion                 10,506                        10,753
Contract liabilities, current portion                        102,778                       62,285
Short-term debt                                              62,089                        109,568
Convertible debt, current portion                            424,298                       --
Current liabilities of discontinued operations               --                            86,496
Total current liabilities                                    903,091                       509,596
Long-term debt                                               54,130                        380
Convertible debt, net of current portion                     --                            423,677
Operating lease liabilities, net of current portion          23,544                        28,566
Contract liabilities, net of current portion                 18,674                        18,705
Other long-term liabilities                                  117,942                       141,197
Long-term liabilities of discontinued operations             --                            42,661
Total liabilities                                            1,117,381                     1,164,782
Equity:
Common stock                                                 174                           173
Additional paid-in capital                                   2,840,028                     2,714,500
Accumulated deficit                                          (2,213,195)                   (2,122,212)
Accumulated other comprehensive income                       11,139                        11,168
Treasury stock, at cost                                      (224,829)                     (215,240)
Total stockholders' equity                                   413,317                       388,389
Noncontrolling interests in subsidiaries                     5,774                         1,635
Total equity                                                 419,091                       390,024
Total liabilities and equity                                 $                 1,536,472   $                 1,554,806
SUNPOWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                             THREE MONTHS ENDED                                                   SIX MONTHS ENDED
                                             July 3, 2022           April 3, 2022          July 4, 2021           July 3, 2022           July 4, 2021
Total revenues                               $         417,772      $         350,277      $         260,751      $         768,049      $         500,887
Total cost of revenues                       336,273                277,968                200,040                614,241                394,210
Gross profit                                 81,499                 72,309                 60,711                 153,808                106,677
Operating expenses:
Research and development                     7,405                  5,010                  4,258                  12,415                 8,882
Sales, general, and administrative           93,043                 76,996                 49,478                 170,039                91,745
Restructuring (credits) charges              (494)                  627                    808                    133                    4,574
(Gain) loss on sale and impairment of        --                     --                     (68)                   --                     (294)
residential lease assets
(Income) expense from transition             (494)                  266                    (1,656)                (228)                  (4,743)
services agreement, net
Total operating expenses                     99,460                 82,899                 47,530                 182,359                94,874
Operating (loss) income                      (17,961)               (10,590)               13,181                 (28,551)               11,803
Other (expense) income, net:
Interest income                              92                     42                     73                     134                    125
Interest expense                             (5,964)                (5,044)                (6,630)                (11,008)               (13,657)
Other, net                                   (14,652)               1,444                  84,075                 (13,208)               39,560
Other (expense) income, net                  (20,524)               (3,558)                77,518                 (24,082)               26,028
(Loss) income from continuing operations     (38,485)               (14,148)               90,699                 (52,633)               37,831
before income taxes and equity in earnings
of unconsolidated investees
(Provision for) benefits from income         (3,226)                11,643                 (3,594)                8,417                  1,532
taxes
Net (loss) income from continuing            (41,711)               (2,505)                87,105                 (44,216)               39,363
operations
(Loss) income from discontinued              (20,857)               (26,298)               (13,505)               (47,155)               (15,359)
operations before income taxes and
equity in losses of unconsolidated
investees1
Benefits from (provision for) income         241                    343                    1,169                  584                    1,267
taxes from discontinued operations
Net (loss) income from discontinued          (20,616)               (25,955)               (12,336)               (46,571)               (14,092)
operations, net of taxes
Net (loss) income                            (62,327)               (28,460)               74,769                 (90,787)               25,271
Net (income) loss from continuing            (785)                  339                    (11)                   (446)                  584
operations attributable to noncontrolling
interests
Net (income) loss from discontinued          --                     250                    449                    250                    967
operations attributable to noncontrolling
interests
Net (income) loss attributable to            (785)                  589                    438                    (196)                  1,551
noncontrolling interests
Net (loss) income from continuing            (42,496)               (2,166)                87,094                 (44,662)               39,947
operations attributable to stockholders
Net (loss) income from discontinued          (20,616)               (25,705)               (11,887)               (46,321)               (13,125)
operations attributable to stockholders
Net (loss) income attributable to            $         (63,112)     $         (27,871)     $           75,207     $         (90,983)     $           26,822
stockholders
Net (loss) income per share attributable to
stockholders - basic:
Continuing operations                        $              (0.24)  $              (0.01)  $               0.50   $              (0.26)  $               0.23
Discontinued operations                      $              (0.12)  $              (0.15)  $              (0.07)  $              (0.27)  $              (0.08)
Net (loss) income per share - basic          $              (0.36)  $              (0.16)  $               0.43   $              (0.53)  $               0.15
Net (loss) income per share attributable to
stockholders - diluted:
Continuing operations                        $              (0.24)  $              (0.01)  $               0.46   $              (0.26)  $               0.23
Discontinued operations                      $              (0.12)  $              (0.15)  $              (0.07)  $              (0.27)  $              (0.08)
Net (loss) income per share - diluted        $              (0.36)  $              (0.16)  $               0.39   $              (0.53)  $               0.15
Weighted-average shares:
Basic                                        173,951                173,376                172,640                173,664                171,920
Diluted                                      173,951                173,376                194,363                173,664                176,794
SUNPOWER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                             THREE MONTHS ENDED                                                SIX MONTHS ENDED
                                             July 3, 2022         April 3, 2022         July 4, 2021           July 3, 2022         July 4, 2021
Cash flows from operating activities:
Net (loss) income                            $         (62,327)   $         (28,460)    $           74,769     $         (90,787)   $           25,271
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization                12,383               4,665                 2,968                  17,048               5,817
Stock-based compensation                     7,072                5,427                 9,613                  12,499               15,050
Non-cash interest expense                    833                  726                   1,650                  1,559                3,155
Loss (gain) on equity investments            15,255               (1,315)               (83,746)               13,940               (39,016)
(Gain) loss on sale of investments           --                   --                    --                     --                   (1,162)
(Gain) loss on business divestitures,        --                   --                    (224)                  --                   (224)
net
Deferred income taxes                        2,554                (13,750)              2,264                  (11,196)             (1,637)
Other, net                                   104                  845                   (935)                  949                  (6,215)
Changes in operating assets and
liabilities:
Accounts receivable                          (25,585)             (12,354)              (7,023)                (37,939)             (2,909)
Contract assets                              13,852               (6,519)               24,011                 7,333                24,498
Inventories                                  18,022               (35,081)              10,096                 (17,059)             1,825
Project assets                               (2,597)              2,892                 (2,892)                295                  6,305
Prepaid expenses and other assets            (83,296)             (86,502)              702                    (169,798)            5,180
Operating lease right-of-use assets          3,017                2,415                 3,490                  5,432                6,365
Advances to suppliers                        150                  (2,222)               568                    (2,072)              (3,284)
Accounts payable and other                   5,074                41,444                (18,077)               46,518               (42,229)
accrued liabilities
Contract liabilities                         44,207               22,066                4,907                  66,273               (8,554)
Operating lease liabilities                  (4,545)              (3,027)               (3,160)                (7,572)              (6,589)
Net cash (used in) provided                  (55,827)             (108,750)             18,981                 (164,577)            (18,353)
by operating activities
Cash flows from investing activities:
Purchases of property, plant and             (12,947)             (8,636)               (1,881)                (21,583)             (6,894)
equipment
Investments in software development          (1,204)              (1,521)               --                     (2,725)              --
costs
Proceeds from sale of property, plant        --                   --                    900                    --                   900
and equipment
Cash paid for solar power systems            --                   --                    --                     --                   (635)
Cash received from sale of                   --                   --                    --                     --                   1,200
investments
Proceeds from business divestitures,         --                   --                    10,516                 --                   10,516
net of de-consolidated cash
Cash received from C&I Solutions             146,303              --                    --                     146,303              --
sale, net of deconsolidated cash
Cash paid for equity investments             (9,420)              (7,000)               --                     (16,420)             --
Proceeds from sale of equity                 --                   149,830               --                     149,830              --
investment
Proceeds from return of capital from         --                   --                    2,276                  --                   2,276
equity investments
Cash paid for investments in                 (3,164)              (154)                 --                     (3,318)              --
unconsolidated investees
Net cash provided by (used in)               119,568              132,519               11,811                 252,087              7,363
investing activities
Cash flows from financing activities:
Proceeds from bank loans and other           78,818               21,458                24,073                 100,276              95,396
debt
Repayment of bank loans and other            (74,100)             (23,944)              (68,497)               (98,044)             (103,573)
debt
Repayment of non-recourse                    --                   --                    (85)                   --                   (9,798)
residential and commercial financing debt
Repayment of convertible debt                --                   --                    (62,757)               --                   (62,757)
Payments for financing leases                (118)                --                    --                     (118)                --
Issuance of common stock to                  --                   --                    2,998                  --                   2,998
executive
Purchases of stock for tax withholding       (2,256)              (7,332)               (4,335)                (9,588)              (6,453)
obligations on vested restricted stock
Net cash (used in) provided                  2,344                (9,818)               (108,603)              (7,474)              (84,187)
by financing activities
Net increase (decrease) in cash, cash        66,085               13,951                (77,810)               80,036               (95,177)
equivalents, and restricted cash
Cash, cash equivalents and restricted cash,  162,564              148,613               229,437                148,613              246,804
beginning of period
Cash, cash equivalents, and restricted       $         228,649    $         162,564     $         151,627      $         228,649    $         151,627
cash, end of period
Reconciliation of cash, cash equivalents,
and restricted cash to the condensed
consolidated balance sheets, including
discontinued operations:
Cash and cash equivalents                    $         206,355    $         142,250     $         140,462      $         206,355    $         140,462
Restricted cash and cash equivalents,        1,024                681                   5,818                  1,024                5,818
current portion
Restricted cash and cash equivalents,        21,270               12,857                5,347                  21,270               5,347
net of current portion
Cash, cash equivalents, and restricted       --                   6,776                 --                     --                   --
cash from discontinued operations
Total cash, cash                             $         228,649    $         162,564     $         151,627      $         228,649    $         151,627
equivalents, and restricted
cash
Supplemental disclosure of cash flow
information:
Property, plant and equipment                $             3,713  $                922  $               (473)  $             4,635  $             1,174
acquisitions funded by liabilities
(including financing leases)
Right-of-use assets obtained in              649                  877                   --                     1,526                11,528
exchange of lease obligations
Working capital adjustment related to        6,265                --                    --                     6,265                --
C&I Solutions sale
Accrued legal expenditures on equity         163                  --                    --                     163                  --
method investment
Deconsolidation of right-of-use assets       --                   --                    3,340                  --                   3,340
and lease obligations
Debt repaid in sale of commercial            --                   --                    5,585                  --                   5,585
projects
Cash paid for interest                       1,312                9,874                 2,090                  11,186               13,527
Cash paid for income taxes                   2,250                250                   20,194                 2,500                20,233

Use of Non-GAAP Financial Measures

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

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

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

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

Other Non-GAAP Adjustments

-- Results of operations of businesses exited/to be exited: We exclude the results of operations of our legacy businesses that we have exited, or to be exited, from our Non-GAAP results. These legacy businesses include our light commercial business that we exited starting in the first fiscal quarter of 2022 to reinforce the Company's strategic direction to focus solely on the residential solar market, Hillsboro, Oregon facility that ceased manufacturing and revenue generation in the first quarter of 2021, as well as, results of our legacy power plant and legacy O&M businesses. We are not doing new activities for these businesses, and the remaining activities comprise of fulfillment of existing outstanding orders, true-up of estimated milestones payments, settlement of certain warranty obligations on projects and other wind-down activities. As such, these are excluded from our non-GAAP results as they are not reflective of our ongoing operating results.

-- Loss/Gain on sale and impairment of residential lease assets: In fiscal 2018 and 2019, in an effort to sell all the residential lease assets owned by us, we sold membership units representing a 49% membership interest in majority of our residential lease business and retained a 51% membership interest. We recorded impairment charges based on the expected fair value for a portion of residential lease assets portfolio that was retained. Depreciation savings from the unsold residential lease assets resulting from their exclusion from non-GAAP results historically, are excluded from our non-GAAP results as they are not reflective of ongoing operating results.

-- Stock-based compensation: Stock-based compensation relates primarily to our equity incentive awards. Stock-based compensation is a non-cash expense that is dependent on market forces that are difficult to predict. We believe that this adjustment for stock-based compensation provides investors with a basis to measure the company's core performance, including compared with the performance of other companies, without the period-to-period variability created by stock-based compensation.

-- Litigation: We may be involved in various instances of litigation, claims and proceedings that result in payments or recoveries. We exclude gains or losses associated with such events because the gains or losses do not reflect our underlying financial results in the period incurred. We also exclude expenses pertaining to litigation relating to businesses that discontinued as a result of spin-off of Maxeon Solar, for which we are indemnifying them. We believe that it is appropriate to exclude such charges from our non-GAAP results as they are not reflective of ongoing operating results.

-- Transaction-related costs: In connection with material transactions such as acquisition or divestiture of a business, the company incurred transaction costs including legal and accounting fees. We believe that it is appropriate to exclude these costs from our non-GAAP results as they would not have otherwise been incurred as part of the business operations and therefore is not reflective of ongoing operating results.

-- Amortization of intangible assets and software: We incur amortization of intangible assets as a result of acquisitions, primarily from the Blue Raven acquisition, which includes brand, non-compete arrangements, and purchased technology. In addition, we also incur amortization of our capitalized internal-use software costs once the software has been placed into service, until the end of the useful life of the software. We believe that it is appropriate to exclude these amortization charges from our non-GAAP results as they are non-recurring in nature, and are therefore not reflective of ongoing operating results.

-- Executive transition costs: We incur non-recurring charges related to the hiring and transition of new executive officers. During fiscal 2021, we appointed a new chief executive officer, as well as other chief executives, and we are investing resources in those executive transitions, and in developing new members of management as we complete our transformation. We believe that it is appropriate to exclude these from our non-GAAP results as they are not reflective of ongoing operating results.

-- Acquisition-related costs: We incurred certain costs in connection with the acquisition of Blue Raven, that are either paid as part of the transaction or will be paid in the coming year, but are considered post-acquisition compensation under the applicable GAAP framework due to the nature of such items. A majority of the expense incurred in fourth quarter of fiscal 2021 represents cash paid to certain employees of Blue Raven for settlement of their pre-existing share-based payment plan, in excess of the respective fair value. For fiscal 2022, other post-combination expenses include change in fair value of contingent consideration as well as deferred post-combination employment expense payable to certain Blue Raven employees and sellers. We believe that it is appropriate to exclude these from our non-GAAP results as they are directly related to the acquisition transaction and non-recurring in nature, and are therefore not reflective of ongoing operating results.

-- Business reorganization costs: In connection with the spin-off of Maxeon into an independent, publicly traded company, we incurred non-recurring charges on third-party legal and consulting expenses, primarily to enable in separation of shared information technology systems and applications. In addition, we incurred certain non-recurring costs upon amendment, settlement or termination of historical agreements with Maxeon to fully enable separate independent operations of the two Companies that is focused on our respective core business. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.

-- Restructuring charges (credits): We incur restructuring expenses related to reorganization plans aimed towards realigning resources consistent with the company's global strategy and improving its overall operating efficiency and cost structure. Although the Company has engaged in restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. We believe that it is appropriate to exclude these from our non-GAAP results as it is not reflective of ongoing operating results.

-- Tax effect: This amount is used to present each of the adjustments described above on an after-tax basis in connection with the presentation of non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. Our non-GAAP tax amount is based on estimated cash tax expense and reserves. We forecast our annual cash tax liability and allocates the tax to each quarter in a manner generally consistent with its GAAP methodology. This approach is designed to enhance investors' ability to understand the impact of our tax expense on its current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments, which may not reflect actual cash tax expense, or tax impact of non-recurring items.

-- Adjusted EBITDA adjustments: When calculating Adjusted EBITDA, in addition to adjustments described above, we exclude the impact of the following items during the period:

-- Cash interest expense, net of interest income

-- Provision for income taxes

-- Depreciation

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

SUNPOWER CORPORATION
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)
Adjustments to Revenue:
                                              THREE MONTHS ENDED                                                  SIX MONTHS ENDED
                                              July 3, 2022           April 3, 2022          July 4, 2021          July 3, 2022           July 4, 2021
GAAP revenue                                  $         417,772      350,277                $         260,751     $         768,049      $         500,886
Other adjustments:
Results of operations of businesses           (3,674)                (14,208)               (6,631)               (17,882)               (8,829)
exited/to be exited
Non-GAAP revenue                              $         414,098      336,069                $         254,120     $         750,167      $         492,057
Adjustments to Gross Profit Margin:
                                              THREE MONTHS ENDED                                                  SIX MONTHS ENDED
                                              July 3, 2022           April 3, 2022          July 4, 2021          July 3, 2022           July 4, 2021
GAAP gross profit from continuing operations  $       81,499         $       72,309         $       60,710        $     153,808          $     106,676
Other adjustments:
Results of operations of businesses           5,348                  (260)                  (3,608)               5,088                  3,303
exited/to be exited
Executive transition costs                    85                     378                    --                    463                    --
(Gain) loss on sale and impairment of         (278)                  (279)                  (519)                 (557)                  (1,013)
residential lease assets
Stock-based compensation expense              1,398                  899                    627                   2,297                  1,164
Business reorganization costs                 11                     --                     --                    11                     --
Transaction-related costs                     56                     --                     --                    56                     --
Non-GAAP gross profit                         $       88,119         $       73,047         $       57,210        $     161,166          $     110,130
GAAP gross margin (%)                         19.5 %                 20.6 %                 23.3 %                20.0 %                 21.3 %
Non-GAAP gross margin (%)                     21.3 %                 21.7 %                 22.5 %                21.5 %                 22.4 %
Adjustments to Net Income (Loss):
                                              THREE MONTHS ENDED                                                  SIX MONTHS ENDED
                                              July 3, 2022           April 3, 2022          July 4, 2021          July 3, 2022           July 4, 2021
GAAP net (loss) income from continuing        $         (42,496)     $            (2,166)   $           87,094    $         (44,662)     $           39,947
operations attributable to stockholders
Adjustments based on IFRS:
Mark-to-market loss (gain) on equity          15,255                 (1,315)                (83,746)              13,940                 (39,016)
investments
Other adjustments:
Results of operations of businesses           7,503                  2,933                  (3,116)               10,436                 8,084
exited/to be exited
(Gain) loss on sale and impairment of         (278)                  (279)                  (587)                 (557)                  (5,970)
residential lease assets
Litigation                                    3,166                  177                    3,447                 3,343                  8,580
Stock-based compensation expense              7,054                  5,329                  9,188                 12,383                 13,542
Amortization of intangible assets and         2,786                  1,978                  --                    4,764                  --
software
(Gain) loss on business divestitures, net     --                     --                     (5,290)               --                     (5,290)
Transaction-related costs                     259                    964                    (82)                  1,223                  118
Executive transition costs                    3,685                  1,469                  502                   5,154                  502
Business reorganization costs                 4,521                  --                     901                   4,521                  1,855
Restructuring (credits) charges               (639)                  186                    871                   (453)                  766
Acquisition-related costs                     2,310                  5,808                  --                    8,118                  --
Tax effect                                    2,025                  (12,186)               2,911                 (10,161)               (830)
Non-GAAP net income (loss) attributable       $             5,151    $             2,898    $           12,093    $             8,049    $           22,288
to stockholders
Adjustments to Net Income (loss) per diluted share:
                                              THREE MONTHS ENDED                                                  SIX MONTHS ENDED
                                              July 3, 2022           April 3, 2022          July 4, 2021          July 3, 2022           July 4, 2021
Net income (loss) per diluted share
Numerator:
GAAP net (loss) income available              $         (42,496)     $            (2,166)   $           87,094    $         (44,662)     $           39,947
to common stockholders1
Add: Interest expense on 4.00%                --                     --                     3,126                 --                     --
debenture due 2023, net of tax
Add: Interest expense on 0.875%               --                     --                     67                    --                     168
debenture due 2021, net of tax
GAAP net income (loss) available              $         (42,496)     $            (2,166)   $           90,287    $         (44,662)     $           40,115
to common stockholders1
Non-GAAP net income (loss)                    $             5,151    $             2,898    $           12,093    $             8,049    $           22,288
available to common stockholders1
Denominator:
GAAP weighted-average shares                  173,951                173,376                172,640               173,664                171,920
Effect of dilutive securities:
Restricted stock units                        --                     --                     3,084                 --                     3,299
0.875% debentures due 2021                    --                     --                     1,571                 --                     1,575
4.00% debentures due 2023                     --                     --                     17,068                --                     --
GAAP dilutive weighted-average                173,951                173,376                194,363               173,664                176,794
common shares:
Non-GAAP weighted-average                     173,951                173,376                172,640               173,664                171,920
shares
Effect of dilutive securities:
Restricted stock units                        770                    1,399                  3,084                 790                    3,299
Non-GAAP dilutive weighted-                   174,721                174,775                175,724               174,454                175,219
average common shares1
GAAP dilutive net (loss) income per           $              (0.24)  $              (0.01)  $               0.46  $              (0.26)  $               0.23
share - continuing operations
Non-GAAP dilutive net income (loss)           $               0.03   $               0.02   $               0.07  $               0.05   $               0.13
per share - continuing operations
1In accordance with the if-converted method, net (loss) income available to common stockholders excludes interest expense related to the 0.875% and 4.00% debentures if the debentures are considered converted in the calculation of net (loss) income per diluted share. If the conversion option for a debenture is not in the money for the relevant period, the potential conversion of the debenture under the if-converted method is excluded from the calculation of non-GAAP net income (loss) per diluted share.
Adjusted EBITDA:
                                         THREE MONTHS ENDED                                            SIX MONTHS ENDED
                                         July 3, 2022        April 3, 2022         July 4, 2021        July 3, 2022        July 4, 2021
GAAP net (loss) income from continuing   $         (42,496)  $            (2,166)  $           87,094  $         (44,662)  $           39,947
operations attributable to stockholders
Adjustments based on IFRS:
Mark-to-market loss (gain) on equity     15,255              (1,315)               (83,746)            13,940              (39,016)
investments
Other adjustments:
Results of operations of businesses      7,503               2,933                 (3,116)             10,436              8,084
exited/to be exited
(Gain) loss on sale and impairment of    (278)               (279)                 (587)               (557)               (5,970)
residential lease assets
Litigation                               3,166               177                   3,447               3,343               8,580
Stock-based compensation expense         7,054               5,329                 9,188               12,383              13,542
Amortization of intangible assets and    2,786               1,978                 --                  4,764               --
software
(Gain) loss on business divestitures,    --                  --                    (5,290)             --                  (5,290)
net
Transaction-related costs                259                 964                   (82)                1,223               118
Executive transition costs               3,685               1,469                 502                 5,154               502
Business reorganization costs            4,521               --                    901                 4,521               1,855
Restructuring (credits) charges          (639)               186                   871                 (453)               766
Acquisition-related costs                2,310               5,808                 --                  8,118               --
Cash interest expense, net of interest   5,829               4,878                 6,498               10,707              13,449
income
Provision for (benefit from) income      2,720               (11,676)              3,560               (8,956)             (1,564)
taxes
Depreciation                             3,571               2,873                 3,198               6,444               6,227
Adjusted EBITDA                          $           15,246  $           11,159    $           22,438  $           26,405  $           41,230
FY 2022 GUIDANCE
(in thousands)                        FY 2022
Residential Customers                 73,000 - 80,000
Residential Adjusted EBITDA/Customer1 $2,000 - $2,400
Adjusted EBITDA                       $90 million -$110 million
Net (Loss) Income (GAAP)              $(15) million -$(35) million

-- Excluding Product & Digital operating expenses for Residential only.

-- Adjusted EBITDA guidance for FY 2022 includes net adjustments that decrease GAAP net loss by approximately $125 million primarily relating to the following adjustments: stock-based compensation expense, results of operations of businesses exited/to be exited, mark-to-market (gain) loss on equity investments, net, acquisition-related costs, interest expense, depreciation and amortization, income taxes, and other non-recurring adjustments.

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