SunPower Corporation (NASDAQ:SPWR) Q3 2018 Earnings Conference Call Transcript

Oct 30, 2018 • 04:30 pm ET

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SunPower Corporation (NASDAQ:SPWR) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon. Welcome to SunPower Corporation's Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-and-answer session and our instructions will be given at that time. (Operator Instructions) As a reminder, this conference call may be recorded for replay purposes.

I would now like to turn the call over to Mr. Bob Okunski, VP of IR at SunPower Corporation. You may begin.

Executive
Robert Okunski

Thank you, Brian. I would like to welcome everyone to our third quarter 2018 earnings conference call.

On the call today, we will start off with an operational and strategic review by Tom Werner, our CEO; followed by Manu Sial, our CFO, who will review our third quarter 2018 financial results before turning the call back to Tom for guidance.

As a reminder, a replay of this call will be available later today on the Investor Relations page of our website.

(Forward-Looking Cautionary Statements)

To enhance this call, we have also posted a set of PowerPoint slides which we will reference during the call on the Events & Presentations page of our Investor Relations website. In the same location, we have posted a supplemental data sheet detailing some of our historical metrics as well.

With that, I'd like to turn the call over to Tom Werner, CEO of SunPower, who will begin on slide three. Tom?

Executive
Thomas Werner

Thanks, Bob, and thank you for joining us.

On this call, we will review our third quarter 2018 financial performance and provide an update on our technology road maps. We will discuss the status of our strategic initiatives, including our acquisition of SolarWorld and provide additional details on our new segmentation.

First, our Q3 2018 themes. Please turn to slide three. We executed well in Q3, meeting our EBITDA forecast and further simplifying our corporate structure. In particular, I'd like to highlight the continued strength in our DG business with global DG sales up approximately 15% year-over-year. This growth was broad-based and included outperformance in the U.S. as well as in our core international DG business, which we define as Europe, Australia and Japan.

We were pleased that our Section 201 technology tariff exemption petition was granted by the administration during the quarter. This decision will help us further enhance our manufacturing footprint in the U.S. market. As a reminder, given the timing of the decision, we will not benefit financially from our exclusion until 2019 as we expect to recognize approximately $20 million in tariffs in the fourth quarter as we deplete our remaining tariff inventory.

Our power plant equipment business was impacted in Q3 by the policy disruption in China. Following the China FIT policy change announced on May 31, several of our customers delayed closing equipment supply agreements until market pricing stabilized. This reduced volume and revenue for our P-Series product in Q3, we expect this to be the case in Q4 as well. However, since then, we have achieved record P-Series bookings in our global