Maxeon Solar Technologies(MAXN) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Maxeon reported Q2 2023 revenues of $348 million, reflecting a 9$30 million, or 8.7% of revenue, aligning with guidance [118] - Cash and short-term investments increased to $456 million from$304 million at the end of Q1, attributed to a capital raise [54] Business Line Data and Key Metrics Changes - Total shipments for Q2 were 807 megawatts, up 4% sequentially and 55% year-on-year, but below guidance of 860 to 900 megawatts due to demand fluctuations [12][22] - Non-GAAP operating expenses were $41 million in Q2, up from$38 million in Q1, consistent with guidance [27] - The utility-scale business became the primary growth driver, with over 1.4 gigawatts shipped in Q2, 90% to U.S. customers [100] Market Data and Key Metrics Changes - In the U.S., residential demand was impacted by NEM 3.0 implementation and high interest rates, leading to a slowdown in sales [114] - European demand is growing, but high inventory levels in the commodity segment have created challenges [25][31] - The company is shifting focus to commercial and industrial (C&I) applications to mitigate residential demand slowdown [52] Company Strategy and Development Direction - Maxeon is focused on reshoring the solar supply chain to the U.S. and expanding its manufacturing capacity, with plans to increase the Albuquerque factory's capacity to 4.5 gigawatts [50][142] - The company aims to maintain strong average selling prices (ASPs) despite competitive pricing pressures in the distributed generation market [48][116] - Future growth is expected from utility-scale projects and the new Maxeon 7 technology, with a strong backlog and higher contracted prices anticipated [137][142] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a rapidly changing demand environment, particularly in the U.S. and Europe, but remains optimistic about long-term fundamentals [22][114] - The company expects a recovery in California's market and anticipates stronger performance in Q4 compared to Q3 due to seasonality [38][149] - Management is confident in resolving disputes with SunPower and believes both parties are incentivized to reach a resolution [115][136] Other Important Information - The company is experiencing a slowdown in residential demand but is optimistic about the C&I market, leveraging past experience in that sector [58][162] - Maxeon has a pipeline of projects expected to drive financial performance improvements over the next three years [142] - The company is committed to maintaining its competitive advantage through cost reductions and operational excellence [120] Q&A Session All Questions and Answers Question: What is the outlook for the demand slowdown in the U.S. and Europe? - Management clarified that while Europe is growing, the issue is primarily related to inventory that needs to be worked off, not a demand slowdown [63] Question: Can you elaborate on the situation with SunPower? - Management stated that both parties believe there have been noncompliance issues under the master supply agreement, and they are working towards a resolution [115][136] Question: How does the company plan to address the slowdown in residential demand? - The company is reallocating sales focus towards C&I applications to mitigate the impact of the slowdown in residential demand [52][162] Question: What are the expectations for Q4 performance? - Management expects Q4 to be stronger than Q3, driven by seasonal factors and a recovery in the Maxeon business [149]