SunPower To Cut Costs; Updates Guidance - Quick Facts

(RTTNews) - SunPower Corp. (SPWR) announced significant cost reduction initiatives, under which the company plans to: reduce capacity to lower inventory, and improve cash flow; implement cost reduction programs that are expected to improve margins and reduce 2017 annual operating expenses to approximately $350 million; and target 2017 capital expenditures of approximately $100 million, a reduction of more than 50 percent compared to 2016. The company will formally announce restructuring program on December 7, 2016.

Tom Werner, SunPower, CEO, said: "We are seeing a significant near term market dislocation in the solar market that we expect will impact our financial performance through 2017. Given the current market environment, we have made the decision to implement a companywide cost reduction program, along with other proactive strategic initiatives, to focus on improving cash flow through the current market dislocation."

The company updated its 2016 financial guidance. Operationally, the company expects fiscal 2016 performance to reflect higher than expected factory underutilization charges resulting from additional capacity reductions as well as the impact from its current cost reduction initiatives. On a GAAP basis, which excludes the impact of any charges related to the planned cost reduction initiatives, the company now expects 2016 revenue of $2.43 billion to $2.63 billion, gross margin of 8 percent to 10 percent and net loss of $295 million to $320 million. On a non-GAAP basis, the company expects: revenue of $2.6 billion to $2.8 billion, gross margin of 9 percent to 11 percent, Adjusted EBITDA of $185 million to $210 million, capital expenditures of $220 million to $240 million and gigawatts (GW) deployed in the range of 1.325 GW to 1.355 GW.

For fourth quarter, on a GAAP basis which excludes the impact of any charges related to the planned cost reduction initiatives, the company expects: revenue of $0.9 billion to $1.1 billion, gross margin of zero percent to 2 percent and net loss of $100 million to $125 million. On a non-GAAP basis, the company expects revenue of $1.0 billion to $1.2 billion, gross margin of 1 percent to 3 percent, Adjusted EBITDA of $0 to $25 million and megawatts deployed in the range of 235 MW to 265 MW.

The company expects to issue revised 2017 guidance once its restructuring proposal is finalized and announced in December.