SunPower’s Q4 earnings plummet due to cracked connectors charge

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SunPower recently secured a deal to sell its Commercial and Industrial Solutions unit. Image: SunPower.

US solar installer SunPower’s backlog has reached its highest ever level, but the firm said its Q4 earnings were hit by a supplier quality charge as well as installation delays because of COVID and poor weather.

The company’s Q4 adjusted EBITDA was -US$7.6 million, in part due to a US$27 million charge related to a cracking issue found in connectors associated with equipment installed in some commercial and industrial projects. The firm is pursuing recovery of costs from the suppliers.

This was compounded by US$6.5 million of residential EBITDA pushed into 2022 as a result of poor weather in California and COVID. “We were impacted by some cost and availability pressure on our supply chain and labour pool,” SunPower CEO Peter Faricy said during a call with investors.

Despite the Q4 loss, 2021 adjusted EBITDA was largely flat year-on-year at US$46.8 million as 2021 revenue jumped 18% to US$1.3 billion. Megawatts recognised for the year reached 527MW, compared with 483MW in 2020.

With nearly 22,500 residential bookings in the fourth quarter, up 42% versus the prior year, SunPower’s total residential install base reached 427,000 in 2021, with a record-high backlog.

Publication of the results comes a week after it was announced that SunPower is selling its Commercial and Industrial Solutions (CIS) business for US$250 million to TotalEnergies, the French energy major that owns a 50.83% stake in the installer.

Thanks to that deal, as well as SunPower’s acquisition of residential solar provider Blue Raven last year, new executive hires and product innovation, Faricy said the firm is positioned to optimise growth this year.

“2021 was a pivotal year for SunPower as we charted a new course for the company with an enhanced focus on driving growth in the residential market, and the forward momentum continues into 2022.”

SunPower also revealed it has entered into a supply agreement with Maxeon – the module manufacturer that it spun off in 2020 – that will allow the installer to exit from exclusivity ahead of schedule, providing the opportunity to continue offering Maxeon residential products while exploring additional panel providers.

For 2022, SunPower is forecasting adjusted EBITDA of US$90 – US$110 million. Compared with previous guidance for the year, the midpoint represents a US$15 million reduction due to the company’s planned exit of the light commercial business and another US$20 million driven by the updated Maxeon supply deal.

Conference call transcript from the Motley Fool.

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