SunPower Corporation (NASDAQ:SPWR) Q2 2023 Earnings Call Transcript

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Peter Faricy: Sure. So on the platform investments, to tackle your second question first. At Analyst Day, we laid out two ways that we thought the platform investments would help improve our performance and make us a more valuable company over time. First of all, we expected the platform investments to be able to help us grow. And what we said was twice the industry growth rate. There were — you remember at the time, there’s a lot of different varying forecasts as to how fast the industry would grow. And so what we said is, we’ll peg our goal is by 2025 to grow at twice that rate or set it another way continue to gain market share. We actually began to gain market share five quarters ago and that has continued. And you can’t predict the future, but I would say we feel pretty good about our position to continue to grow our market share as we look forward over the next two years.

The second-half of the platform investments is to build the growth and innovation that will allow us to not only attract new customers, but to be able to get more EBITDA per customer. And you might remember, we’re using EBITDA per customer as kind of a proxy for our lifetime value of our relationship together with them. We don’t see our relationship as one and done when they buy solar panels. We really see this as an ongoing relationship over the lifetime of their homeownership, and we would love to be able to serve them on panels and batteries and EV chargers and VPP services and beyond. So it’s really helping us achieve that $3,000 to $4,000 of adjusted EBITDA per customer. That’s the second part of the platform investment.

Kashy Harrison: Got it. That’s helpful. Thank you. And then maybe for my follow-up question for Beth, congrats on the new role. You’ve indicated that you intend to reduce inventory levels to somewhere with second-half 2023 demand and inventories currently north of $400 million. Can you give us a sense of your perception of what the appropriate level of inventory would be in the current environment on a dollar basis? Thank you.

Peter Faricy: I don’t necessarily define it in terms of dollars. I define it in terms of days of inventory and we’re working on with the operations team to define what that is for various segments, because it’s different segments. We’ll have different levels of risk of supply. So we will define those for the individual segments. But somewhere in the neighborhood of 60-days is about normal.

Kashy Harrison: Got it. Thank you very much.

Operator: Thank you so much. Your next question comes from the line of Michael Blum, Wells Fargo. Please go ahead.

Michael Blum: Thank you. Good morning, everyone. I want to ask a couple of questions about storage. Obviously, you saw a big, a nice tick up in attach rates. I’m wondering if you can just discuss customer reception to the larger battery, which I think would be geared more towards grid outages, but would come with a larger price tag. So I’m just curious in this environment how that’s playing out?

Peter Faricy: Yes. Thank you, Michael. We were quite pleased with the growth in the attach rates for our SunVault in California, I think we’ve talked about just to give everyone perspective. In our direct business, we finished last year with attach rates, let’s say, 18%-ish and they were above 60% as we were going through July. So we’re very pleased with the growth there. I think what’s interesting in California is that you should imagine a case soon where every consumer should have battery standard along with solar panels. It really doesn’t make sense economically to buy solar panels without a battery going forward. And this model isn’t new. It’s very much the model that you see in countries like Germany. And so we’re, sort of, gearing our sales presentations and our operations and our mindset to operate more like they do in Germany, which is what a customer buys from us, you should expect they’ll buy for both.

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