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

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Peter Faricy: Sure. We — if I start with the customer piece, because the number of customers drives the entire engine here, we did 41,000 customers in the first-half of the year. Our guidance implies we’d get 30,000 to 50,000 more. The midpoint is 40,000. So I think that’s reasonable and probably a little bit conservative on our part, but it reflects this more uncertain market conditions, macroeconomic conditions right now. I would say from a gross margin and OpEx perspective, we’ve taken actions to improve both. In particular, we highlighted the improvement we made in OpEx we go forward. And Beth, do you want to add a little bit more about the three things that we’re really focused on to drive more cost improvement as we go?

Beth Eby: So one of the things that you saw in this last quarter is we have a few unusual items in our gross margin that we don’t expect to repeat in the coming quarters. The first was $8 million of amortization of higher install costs over lower volume. We’re working on absolutely getting those install costs down and we’ve normalized the volume. And then we also had about $5 million of inventory write-downs. And we always have a look at your inventory every quarter and always have a little bit of inventory write down $5 million was a little bit higher than normal. So we don’t expect those to repeat next year. And then put those on top of a normal focus on gross margin expansion and we do expect to improve gross margin significantly from where we are over the next couple of quarters.

Andrew Percoco: Great. Thanks for that. And just my follow-up question is related to the dealer accelerator program and how your strategy maybe changes in this environment?

Peter Faricy: Yes. Well, first of all, we’re quite pleased with the program. I think the dealers as part of that program. If I just were to highlight two examples for you, one of the dealers we invested in last year, Renova, which had primarily been serving Palm Springs, Palm Desert area. That investment with them has allowed them to expand their operations into Arizona interestingly enough. And they’re really making terrific progress. We’re quite excited to continue to work with them. And they have a real strong expertise in serving very hot deserty climates, which really is a specialty, especially in this kind of climate and whether we’re seeing this summer. And so you can imagine these guys being able to expand in Arizona and Nevada and really doubling or tripling down in their business, so we’re quite excited to work with Vincent and his team.

We also are quite excited about the investment we made earlier this year in Wolf River out of Minnesota. And as we talked about, they were a great candidate for us, because all of their volume was 100% incremental to SunPower, they had previously not been part of the SunPower family. But they’re also a company that shares our values for high standard for customer experience. You take a look at their ratings throughout that Upper Midwest area, they are the solar company to go to, if you want to have a great from experience. So we’re quite pleased. I think it’s likely that our new investments will slow down, but I’ll tell you that we’re always looking for opportunities to work with new partners across the U.S. And so we don’t have any particular investments that we’re planning out at the moment, but we’re always looking and scouring the U.S. for who would be the next best company for us to work with in that capacity.

And if we find one, we’ll certainly act on it.

Andrew Percoco: Great. Thank you.

Operator: Thank you so much. Your next question comes from the line of Brian Lee of Goldman Sachs. Please go ahead.

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