Sunpower Posts Q3 Results

SAN JOSE, Calif., Oct. 18 /PRNewswire-FirstCall/ -- SunPower
Corporation (Nasdaq: SPWR) today announced financial results for the 2007 third quarter,which ended September 30, 2007. This press release contains both GAAP and non-GAAP financial information. Non-GAAP figures are reconciled to the closest GAAP equivalent figures on the final page of thispress release. Revenue for the 2007 third quarter was $234.3 million, up 34.9 percent from prior-quarter revenue of $173.8 million and up 258.6 percent from year
ago third-quarter revenue of $65.3 million. The Components segment accounted for $76.6 million of third-quarter revenue, a 9.9 percent increase from the prior quarter revenue of $69.7 million. The Systems segment accounted for $157.7 million of third-quarter revenue, a 51.6
percent increase from prior- quarter revenue of $104.0 million. 2007 third-quarter revenue growth was primarily driven by continued strong demand for SunPower products and by faster-than-anticipated completion of certain projects in the Systems segment. For reporting purposes, the Systems segment generally represents products and services sold directly to
the system owner, while the Components segment includes products sold to installers and resellers. Revenue associated with SunPower solar panels sold through the Systems segment is recorded in the Systems segment. On a GAAP basis, SunPower reported total operating income of $6.8 million and diluted net income per share of $0.10. These figures include operating expenses for amortization of purchase accounting intangible assets of $6.9 million and non-cash, stock-based compensation of $13.4million. On a non-GAAP basis, adjusted to exclude non-cash charges for amortization of intangible assets, stock-based compensation and the related
tax effects, SunPower reported total operating income of $27.0 million and diluted net income per share of $0.33. This compares with the prior quarter's total operating income of $22.0 million and $0.25 diluted net income per share. Also on a non-GAAP basis, SunPower reported total gross margin for the 2007 third quarter of 20.4 percent, compared with total gross margin of 23.0 percent in the prior quarter. Third-quarter non-GAAP total gross margin was influenced by the higher mix of revenue in the Systems segment, which achieved gross margin of 18.7 percent, while the Components segment reported gross margin of 24.1 percent. "SunPower delivered another quarter of strong financial performance," said Tom Werner, SunPower's CEO. "This was made possible by continued strong customer demand for our high-performance solar technology and excellent execution by both our Systems and Components business segments.
The overall solar business environment continues to be characterized by rapid and dynamic growth, particularly with respect to the ongoing evolution of country-specific customer incentive programs. We believe that SunPower's broad value-chain footprint and global geographic reach provide a diversified business portfolio while enabling rapid access to and participation in a variety of promising new growth markets. "During the quarter, SunPower signed a three-year Solar America Initiative (SAI) agreement with the U.S. Department of Energy, which is the
solar industry's largest U.S. government research and development contract. Our business model allows us to directly effect cost reduction and process efficiency improvements across the entire value chain from ingot growing to wafering, solar cell and panel manufacturing, product design and customer delivery infrastructure. With this degree of vertical integration, we
believe that SunPower is uniquely well positioned to leverage work under the SAI program to accelerate reduction in installed solar system costs."A core element of our cost reduction plan is achieving manufacturing scale. We are currently ramping production on the first two lines in Fab 2. We are confident that equipment design improvements will allow increased throughput on our Gen 2 cell lines beginning with Line 7, which we expect to begin ramping in the fourth quarter of 2007. In addition, our recently announced wafering joint venture will allow us to use space previously dedicated to wafering in Fab 2 for two more cell manufacturing lines. Combining these benefits, Fab 2 will have a total of 12 lines and a nameplate capacity of 466 megawatts, allowing SunPower to capture significant economies of scale as we continue to build out more production lines through 2009." "Our Gen 2 solar cell technology is now in volume production and achieving median solar cell efficiencies above 22 percent," continued Werner. "During the third quarter, we were pleased to receive test results from Sandia National Laboratory confirming measurement of a SunPower production solar panel with a total-area solar panel efficiency of 20.1 percent. We believe that this is a world record for mass-produced solar
panels, and the first time that a commercially available solar panel has breached the 20 percent efficiency barrier. Higher solar panel efficiency yields important benefits to our customers and our internal systems supply chain by reducing the amount of land, material and site work needed to install a given capacity solar system, and/or by enabling significantly higher capacity systems to be installed within given site constraints. "We believe that combining our high-efficiency solar cell technology with thinner wafers will allow us to achieve powerful cost leverage by further reducing the silicon consumption required to produce a given energy
production output. During the third quarter, we successfully processed sample lots of 145 micron thick wafers through our standard solar cell production lines. When implemented in production, this wafer thickness improvement has the potential to reduce SunPower's polysilicon consumption to less than 6 grams- per-watt in the future." "We expect tight global polysilicon supply to ease for SunPower in 2008 as new polysilicon capacity comes on line," said Werner. "As our long-term silicon supply contracts go into effect over the next year, we expect
SunPower's average silicon costs to improve compared to current short-term pricing. We are actively managing our silicon supply as new polysilicon producers begin production and we ramp Fab 2. "SunPower is also actively engaged in setting up the supporting infrastructure to complement our growing portfolio of silicon agreements. We have recently entered into a series of agreements that illustrate the comprehensive approach that SunPower uses to manage the growth of our silicon supply over the near-term and long-term."