SunPower hit by US$31 million cracking issue, warns of further drags on Q4 results

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SunPower said it expected charges of around US$31 million to be realised as a result of the cracking issue. Image: SunPower.

US solar installer SunPower is to be hit by a cracking issue discovered in connectors associated with equipment installed in some commercial and industrial (C&I) projects, resulting in charges of around US$31 million.

And SunPower has too warned that its Q4 performance will be below the midpoint of its previously-stated guidance after poor weather in California was blamed for installations being pushed back into 2022.

In a statement issued late yesterday (20 January 2021), SunPower revealed that it had identified a cracking issue associated with factory-installed connectors within some third-party commercial equipment used in commercial and industrial and light commercial value-added reseller products.

The installer said it was now working to replace these connectors – which it expected to largely complete this year – at a cost to the business of around US$31 million. A charge of around US$27 million is to be recorded in the firm’s Q4 2021 results, followed by an additional charge of around US$4 million recorded in Q1 2022 as it pursues suppliers for compensation.

All charges are to be funded by company cash reserves, SunPower said, while also reiterating that residential products were not impacted.

Meanwhile, SunPower also guided that its Q4 earnings will be towards the lower end of its guidance of US$41 – 18 million. The company said numerous factors had sent Q4 earnings below the midpoint of that range, including poor weather in California and lingering COVID impacts which had shifted around US$6.5 million of earnings into 2022 and an investment of US$3 million in sales and marketing to support the company’s residential expansion.

In preliminary results for the quarter, SunPower confirmed it had recognized 113MW of residential installations in the final quarter of 2021, supported by residential lead generation “hitting new high”.

SunPower also confirmed that it now expected to finalise the sale of its CIS unit “within weeks”.

6 June 2023
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