SunPower (SPWR)

[sunnypease 35]

44 minutes ago, dydo said:

SunPower reports a loss in Q3, guides the loss in Q4. Expects profitability by H2 2018

https://finance.yahoo.com/news/sunpower-reports-third-quarter-2017-120500807.html

Big hoopla on non-GAAP by SA, someone is buying it.

Why does SeekingAlpha so boldly display those non-GAAP numbers without saying they are non-GAAP.  I mean on the earnings tab of the company.

39c GAAP loss.  selling less in both residential and commercial than a year ago. Meanwhile the pie gets larger and so their market share goes down faster.

It will be entertaining to read Travis's spin.

Edited November 2, 2017 by sunnypease

[stolypin 0]

sunnypease,

I see your point. 

T. Werner explained that in order to give a more detailed overview of "true" margins they had to use non-gaap numbers. It is a given and emphasized on every report that GAAP numbers are true numbers but Non-GAAP numbers show the true margins of DG and Power Plant markets. Is it unethical is a different question, but at least in this case it makes sense since we know what the true margins of different sectors are and then we compare that number to gaap margins to see the difference. 

So I see their non gaap numbers merely as supplemental information so to speak. 

 

[stolypin 0]

Robert,

This comment of yours  keeps me up at night since I am long SPWR. 

"The value of SPWR does not reflect on the value of TOTAL shares. At $120B, it has no impact on it. 
I may not be clear enough. They are not trying to save money on SPWR. The motion of saving is only if someone cares about the price. I have said three times they do not care about the price. 
They want ownership of the company, and they do not care how much value this represents. Of course, financially this is how I see this. I saw this before and I expect to see this elsewhere again. TOTAL is not an investor, they are the owner. 
You are only valuing your business when you sell or borrow against it, otherwise, its operating potential is what matters.
If anything, there is an opportunity to increase this ownership and they have means, as I described them. 
To conclude my message, TOTAL is playing for itself, and not for any one else owning shares. Their goal is not to make money on shares, but own qualified, effective solar business. That ownership and not the value of shares what matters. 
The distinctive difference does not make future actions by TOTAL shareholder friendly. TOTAL does not need SPWR to be listed publically to operate and decide its future. So taking it off from the public arena is, in fact, a lot more functional. 
If one can see above as what to expect, can see TOTAL allow public shares drop the value, go true difficult transition stripping problems away and perhaps reorganize the company under private label. This would be done by buying debt, and that is exactly what TOTAL is doing. 
Finally, faded value of shares only empowers TOTAL to buy SunPower out. After conversion of $200M into 22M shares, the price per share drops to $7.73 on 158M shares. Bringing TOTAL ownership to 62%, Having negative equity by 2018 August or November, you have stock probably hit $4 to $5, maybe less. 
Another buy of the debentures, another conversion, very simple.
Time will tell." -SA "Why You Shouldn't Invest In SunPower's Weakness" - Robert Dydo

I have 4 point to throw your way and I would be very grateful to hear what you think. 

1. Institutional Investors. Why do they keep SPWR in their portfolio if the scenario you described in your  comment is the most probable one?
2. >500MW France Projects. Total helped SPWR acquire about 500MW of projects in France. To me it seems to directly contradict your point that explain the true intentions TOTAL has towards SPWR. Do you think this 500MW project collaboration as a contradiction to your point?
3. Solar+Storage. On Q3 earnings Tom stated that over 50% of commercial projects in 2016 have storage in them. The storage component is accretive for SPWRs product portfolio and will increase margins (my speculation). 
4. FAB 3 and NGT cell/panel. FAB 3 had 750 MW of capacity before it was shut down. In Q3 SPWR will start producing their NGT cells there and coincidentally Werner stated that sustainable profitability will start in 2H 2018. They are obviously alluding to NGT that will rival cost of S6. What are thoughts on this?

 

I think your position on SPWR has very solid basis so I will try to see if I can shake it because every time I read your article about SPWR I question my reasoning about SPWR  but never actually change my mind. 

Thank you 

 

 

[dydo 1,560]

Hello,

Let me quote the following post I made after Ener's newest article.  However, I will quote only important parts,

SPWR will become the next great bankruptcy. It will be managed to that level with Total's approval to take the healthy core out of the markets for pennies as the owner of all the bonds (Total) will remove the company from the market.
SPWR owns 28M shares. Only a blind man would pay the current market price for CAFD. That current price is $430M worth to SPWR. Just to pay for the bonds owned by Total.
I think by the time May 2018 comes along SPWR will be below $5.
By 2020 SPWR will be off the market.

1. My answer is Einhorn and SunPower. Meaning even smartest people lose money when they fall in love with their own choice (not the object of it). Institutions are not the smartest people either, they just have money of many people. 

2. Do you think bankrupt companies stop operating? Do you think that taking something off the market so it does not exist? what does 500MW of projects in France do for the financial status of the company? Not a lot. I am going to ask you what 500MW of projects in Mexico did for them?

Points 3 and 4, my thoughts are are that SPWR is going to be severely crippled with Suniva outcome. SPWR can only exist in the high ASP, high demand margin with unrestricted access to the US. France will not rescue the company.  It is a one-off,  SunPower has no global presence and its capacity is peanuts to pay for the operations. In my opinion, those points cannot be measured. This is what I would consider rhetorical investing.  I do not subscribe to such an investment unless it turns into financial one.

How to spot it? The company has to have a history of delivering rhetoric to the fact, which I see little to no evidence here. Finally look at the financial statements, all of my reasoning is there.

[dydo 1,560]

The financial state:

9 months $340M loss, retained earnings $1.5B loss, $700M in equity in nine months from $1B equity. Cash account $275M versus $440M. Cash flow from operations $315M loss.  Immediate payable debt to Total $300M, no cash for it unless CAFD gets sold. When CAFD gets sold, zero money for SPWR, it is a swap for bonds. Total gets the money.

What is worse gross profit for 9 months is negative 39K, this means the company's production cost is greater than its revenue. GM is below 0%, their operation expense brings to a negative 283M.  This got worse since 2016. GM for 9 months was 14.4% Their operating cost was $100M higher but so it was their revenue by about $300M. I think you should understand that the company got worse in 2017 not better. Now the environment around them got worse than one in 2016.

I repeat SPWR is a company extracting its success from high demand, high ASP (condition of the past that is why it loses money non-stop) and without any limitations to the US market (now limited add 30% tariff). None of those things work for them and they have lost only one place they have done business effectively until 2016. They got worse as an organization in 2017. 

For your own due diligence read this link below, and do not lose sleep over my words, but decide on your own. BTW I continue to believe in my original statement. Total is not an investor, it is an owner, they will hold to them even they are own one cent. It is simple it costs them less to buy crisis than success.

http://files.shareholder.com/downloads/SPWR/5346741230x0xS867773-17-66/867773/filing.pdf

[dydo 1,560]

BTW when I wrote the article and got published on August 4th. SPWR stock was at $9.25. more than it got last week at $8.65. But it was as low as $6.61 in the period.  

[dydo 1,560]

Finally this

Can someone explain the contradiction of the statement from 10-Q for Q3 2017, quoted below with the one offered in their news release: "We remain committed to improving our competitive position, strengthening our balance sheet and returning to long-term sustained profitability starting in the second half of 2018."
10-Q
The Company continues to face challenging industry conditions and a competitive environment. While the Company continues to focus on improving
overall operating performance and liquidity, including managing cash flow and working capital, notably with cash savings resulting from restructuring actions and
cost reduction initiatives put in place in the third and fourth quarters of 2016, the Company's net losses continued through the third quarter of 2017 and are expected to continue through 2018,

[dydo 1,560]

As I have predicted Total is buying SPWR debt.

They have $200M out of $300M of 2018 debenture, they have $250M of $400M debenture 2021 and $100M from $450M 2023 debenture.

So in the short while Total put $550M behind bonds issues by SPWR. It appears the first step of the reorganization started with securing the claims to the company. 

[sunnypease 35]

PR:  "long-term sustained profitability starting in the second half of 2018"

10Q:  "net losses ... expected to continue through 2018"

Do they mean that they think they will be profitable starting in 2019? 

Robert, do their notes have some sort of maximum debt to EBITDA ratio?  It might be interesting to calculate about when they would hit up against that.

[dydo 1,560]

$568M loss in Q4.  One more year of this and gone?

[explo 706]

9 hours ago, dydo said:

$568M loss in Q4.  One more year of this and gone?

It's another great money losing machine in the industry. They had 1 billion in equity a year ago and lost 85% of that in one year. It is hard to understand the excitement about that causing it to rise from 6's to 9's in Q4. Investors can't separate those that create shareholder value from those who destroy it in the solar industry.

[sunnypease 35]

Well.. nobody even commenting on SPWR today?

They are exiting the power plant business.

And they seem to be running tight on the money.  Yet they are still shooting for profitability end of year.

[sunnypease 35]

ok.  guess it's just me here on SPWR again..

They seem to have negative margins in all segments now?  

Their numbers & forecasts assume that they will receive an exclusion to the tariffs.

And they are rolling out some magical new solar technology that I did not understand.  Anyone else get it?  Plus, they don't plan to spend CapEx to deploy this new tech themselves, rather they will seek partners.

Somehow the stock is up.  Surreal!

[SCSolar 83]

15 hours ago, sunnypease said:

ok.  guess it's just me here on SPWR again..

They seem to have negative margins in all segments now?  

Their numbers & forecasts assume that they will receive an exclusion to the tariffs.

And they are rolling out some magical new solar technology that I did not understand.  Anyone else get it?  Plus, they don't plan to spend CapEx to deploy this new tech themselves, rather they will seek partners.

Somehow the stock is up.  Surreal!

https://finance.yahoo.com/quote/SPWR?p=SPWR&.tsrc=fin-srch-v1

 

This is a dog of a company. They lost $478Million this quarter and are expecting another $195-$215M for Q3.

 

For those that thought lease arrangements were a good business model in the past, Sunpower took a $50M writedown on the lease agreement assets in Q2.

[Klothilde 85]

I see them as the American Yingli.  Dead but still alive somehow.

Does anybody know why they have $1B in market cap with a book value of $35M ???

[sunnypease 35]

2 hours ago, Klothilde said:

I see them as the American Yingli.  Dead but still alive somehow.

Does anybody know why they have $1B in market cap with a book value of $35M ???

I think it's all about the name.  They could be a permian basin shale oil extractor and still catch an environmentalist bid with a name like that.  In fact, they are in cahoots with a major oil company.

Getting my popcorn ready for Travis' report!

Edited July 31, 2018 by sunnypease

[stolypin 0]

SunnyPease, 

Please make an effort to read the transcript in order to contribute meaningful feedback on the earnings report. Let me assist you with that.

"They seem to have negative margins in all segments now?"

No they do not. 0% on PowerPlants. 6% on Commercial, 20% on Resi.

Since they had plants write off due to refurbishing Fab 3 to NGT their GAAP numbers took a $460M hit. 

"Their numbers & forecasts assume that they will receive an exclusion to the tariffs."

No, this is wrong. Not sure where you got it from. See transcript:

As a reminder, our guidance assumes our estimated impact of the Section 201 tariffs for Q3 and 2018 as a whole. We expect Q3 tariffs to be around $25 million.

"And they are rolling out some magical new solar technology that I did not understand.  Anyone else get it?" 

See transcript below:

First of all, NGT is based on a six inch M4 wafer platform compared with our five inch legacy wafers. The resultant cells produce almost 70% more power per unit. Our technology has developed a simplified manufacturing flow that enables 25% cell efficiency with fewer steps and fewer production tools, thereby reducing capital expenditures.

 

Hope this helps.

 

[dydo 1,560]

13 hours ago, SCSolar said:

https://finance.yahoo.com/quote/SPWR?p=SPWR&.tsrc=fin-srch-v1

 

This is a dog of a comppany. They lost $478Million this quarter and are expecting another $195-$215M for Q3.

 

For those that thought lease arrangements were a good business model in the past, Sunpower took a $50M writedown on the lease agreement assets in Q2.

Sounds like a negative equity by Q3, that is a sign that the company is done. However, it may not be with Total paying for it.

[stolypin 0]

Robert,

In Q3 sale of lease portfolio will result in

"proceeds to be about $200 million in cash and the buyer will assume or pay off $436 million of debt for total proceeds of $636 million."

So I am not sure how you come up with negative equity in Q3

[dydo 1,560]

4 minutes ago, stolypin said:

Robert,

In Q3 sale of lease portfolio will result in

"proceeds to be about $200 million in cash and the buyer will assume or pay off $436 million of debt for total proceeds of $636 million."

So I am not sure how you come up with negative equity in Q3

I thought to have one of $35M faced with I quote below was explaining it:

"The company's third quarter GAAP guidance is as follows: revenue of $425 million to $475 million, gross margin of negative 1.0 percent to positive 1.0 percent and a net loss of $215 million to $195 million."

 

[stolypin 0]

Ok, I see. You just didn't take it into account since asset sales are not guided in the guidance. 

[SCSolar 83]

10 hours ago, stolypin said:

Ok, I see. You just didn't take it into account since asset sales are not guided in the guidance. 

Correct me if I am wrong, asset sales are not revenue. They may have some profit built positive or negative . If like  CSIQ, the assets sales gains show up  as a line item  of other income. I would presume that the Net Income guidance would include any net gains from asset sales.

[dydo 1,560]

 

1 hour ago, SCSolar said:

Correct me if I am wrong, asset sales are not revenue. They may have some profit built positive or negative . If like  CSIQ, the assets sales gains show up  as a line item  of other income. I would presume that the Net Income guidance would include any net gains from asset sales.

Yes. You are right. The asset sales like one 8point3 Energy Partners was recognized in the cash flow. That transaction of $360M turned around $2M cash after they paid the debenture off. Those are likely in the other income on the income statement. Despite the toss of high figures from another asset selling, the net income loss/deficit will wipe the equity to a negative figure, as they are included. That is the state of Yingli in a making. SPWR is on the cusp of bankruptcy, imo. 

[explo 706]

19 hours ago, stolypin said:

Ok, I see. You just didn't take it into account since asset sales are not guided in the guidance. 

So you think that will result in larger than 160m profit (equity gain)? From what was said above and if they don’t sell their stock their equity in Q3 will be below

35 -195 = -160 million

[stolypin 0]

Explo,

"So you think that will result in larger than 160m profit (equity gain)?"

Yes, it surely will be. Please see excerpt from transcript below:

"So we have lease, microinverter and power plant, all three we expect to close in Q3. And we have not guided a number for proceeds from those transactions. I would say it could meaningfully be used to ramp NGT.."

 

Edited August 2, 2018 by stolypin

[SCSolar 83]

1 hour ago, stolypin said:

Explo,

"So you think that will result in larger than 160m profit (equity gain)?"

Yes, it surely will be. Please see excerpt from transcript below:

"So we have lease, microinverter and power plant, all three we expect to close in Q3. And we have not guided a number for proceeds from those transactions. I would say it could meaningfully be used to ramp NGT.."

 

Profit is not the same as cash generated from the sale. They may recover 20-30%  equity invested which is not profit. That equity returned as cash can be invested into NGT.

[sunnypease 35]

https://www.pv-magazine.com/2018/08/16/sunpower-borrows-110-million-to-refinance/

Having some cash flow difficulties now.  Does anyone here dabble with options?  I'm thinking of buying some year out puts on SPWR.  

[disdaniel 73]

Looks like SPWR dodged a bullet on the tariff exclusion

http://newsroom.sunpower.com/2018-09-18-Statement-by-SunPower-Chairman-and-CEO-Tom-Werner-on-the-Companys-Solar-Tariff-Exclusion

[dydo 1,560]

word bankruptcy enters SunPower's official language

https://www.pv-tech.org/news/sunpower-to-sell-more-assets-to-avoid-bankruptcy-in-2019

[SCSolar 83]

4 hours ago, dydo said:

word bankruptcy enters SunPower's official language

https://www.pv-tech.org/news/sunpower-to-sell-more-assets-to-avoid-bankruptcy-in-2019

I educated a person  who was looking to get into Sunpower   last spring. He had no knowledge regarding the industry and little about Sunpower. He was looking to be hired as a Director of international procurement. I mentioned they are in deep trouble and had been "restructuring" to cut their cash burn. I told him that I thought they had 2 years before they are bled dry. I mentioned to him if they offer him a job if he has nothing else lined up then take it, else take a different offer. It does not surprise me that this bankruptcy is in the discussions now.