Good day, ladies and gentlemen. Welcome to the Maxeon Solar Technologies Fourth Quarter 2023 and First Quarter 2024 Earnings Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Robert Lahey of Maxeon Solar Technologies. Sir, you may begin.

Thank you, operator. Good day, everyone, and welcome to Maxeon's Fourth Quarter 2023 and First Quarter 2024 Earnings Conference Call. With us today are Chief Executive Officer, Bill Mulligan, Chief Financial Officer, Kai Strohbecke; and Chief Strategy Officer, Peter Aschenbrenner. Let me cover a few housekeeping items before I turn the call over to Bill. As a reminder, a replay of this call will be available later today on the Investor Relations page of Maxeon’s website. During today's call, we will make forward-looking statements that are subject to various risks and uncertainties and are described in the Safe Harbor slide of today's presentation, today's press release, the 20-F, the 6-K and other SEC filings. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. To enhance this call, we have also posted a supplemental slide deck on the Events and Presentations page of Maxeon's Investor Relations website. Also, we will reference certain non-GAAP measures during today's call. Please refer to the appendix of our supplemental slide deck, as well as today's earnings press release, both of which are available on Maxeon's Investor Relations website for a presentation of the most directly comparable GAAP measure, as well as the relevant GAAP to non-GAAP reconciliations. With that, let me turn the call over to Maxeon's CEO, Bill Mulligan.

Thanks, Rob. Good morning. It has been a while since our last earnings call and we have a lot to communicate today. Since the middle of last year, Maxeon has been under significant pressure due to the unprecedented market dislocation caused by worldwide Chinese module oversupply, high interest rates and policy changes. Maxeon also suffered from the termination of our SunPower supply agreement and delivery push outs by two of our primary utility scale customers. These headwinds unfortunately coincided with the peak of our utility scale prepayment amortization. As a result, the company has been facing a serious cash flow challenge. To address this, we recently negotiated commitments for significant liquidity support from our largest shareholder TZE and we successfully restructured our 2025 convertible bonds with the majority of the debt expected to be converted into equity later this year. Unfortunately, these transactions will require the issuance of a large number of new shares resulting in substantial dilution to existing shareholders. I'll now provide further commentary on the market dynamics that caused us to take these actions and provide additional details on the financing transaction. Kai will then review our fourth quarter 2023 and first quarter 2024 results and provide our outlook for the second quarter and the rest of 2024. We'll then conclude with Q&A. First, as a reminder, Maxeon initiated a series of capacity restructuring initiatives last October. We initiated the shutdown of our Maxeon cell capacity in Malaysia and pivoted the Maxeon 7 commercialization plan from incremental capacity to a retrofit of our Maxeon 3 capacity in the Philippines. While these actions are on track and projected to enhance profitability when completed, we're now fighting battles on a few additional fronts. In DG, our efforts to grow volume in the US through our new US dealer channel have been impacted by the general market slowdown particularly in California. In Europe, the abundance of modules being sold at prices in the low teens has challenged our margin profile and further curtailed demand for our products. The dramatic market shift that started in mid-2023 left us with large amounts of inventory that tied up cash and so far our efforts to work down these inventories have been at a slower pace than we initially anticipated. On the utility scale side, two of our large customers experienced significant project delays and we have been unable to quickly reallocate the affected volumes and as a result our financial output for 2024 will reflect the impact of these continuing headwinds. In addition to these challenges, our liquidity was also impacted by our utility scale prepayment amortization schedule, where we have been amortizing customer prepayments that were received in 2021 and 2022 and are now collecting only a portion of the associated sales revenue as cash. In response to this perfect storm of cash and profitability challenges, the company and our advisors assessed all potential sources of funding and found that the only viable option involved new liquidity from our largest shareholder and secured creditor TZE. TZE has agreed to invest $97.5 million into the company via a debt instrument and has also committed to an additional $100 million equity investment in each case subject to regulatory approval. In addition, substantially all of the holders of the $200 million 2025 convertible notes have agreed to exchange their bonds and accrued interest into new bonds due in 2028 which are convertible into equity at the note holders option starting July 2nd and $137.2 million of which must be converted into equity upon TZE's equity investment. Following the $100 million equity investment by TZE, their ownership of shares outstanding is planned to be at least 50.1%. While we believe these transactions are necessary to stabilize our balance sheet and allow management to focus on returning our business to profitability, they will also result in a substantial dilution for existing public shareholders. I'll now provide an update on our utility scale and DG businesses. In utility scale, we had established solid momentum heading into 2024 with our module operations running well and a solid backlog extending deep into 2025. However, in early Q1, we were informed by two large customers that they were experiencing project delays and would be unable to accept module deliveries based on the contracted schedule. We recently terminated one of these contracts for cause and are seeking damages and we are working with the other party to find a mutually acceptable solution. Due to the long sales cycle associated with this market and the broad availability of low price modules from Southeast Asia and India, we were unable to replace the lost demand in the immediate term and have had to curtail production at our utility scale solar cell and module factories as a result. This not only increased our product costs due to unabsorbed manufacturing overhead but also meaningfully impacted our near-term top-line and cash generation capability. Going forward, we are seeing an improving price and demand environment driven by recent changes in the US trade policy landscape, including increased tariff risk due to the imminent removal of the Section 201 bifacial tariff exclusion as well as potential new AD/CVD tariffs. We believe Maxeon is not and should not be a target for such import tariffs and we are actively engaged in both processes and exerting our view that our supply chain should be outside the intent of these proposed tariffs. Finally, we are making continued progress toward launching domestic manufacturing in Albuquerque, New Mexico. In DG, while we continue to make progress ramping our US dealer channel, market demand has been sluggish particularly in California where many installers are still adjusting to NEM 3.0. We're focused on dealers who are familiar with our product and are skillful at monetizing its unique attributes. Despite the increased availability of alternative premium modules over the past few years, our product's reputation, as the undisputed world's best module remains very much intact. We see this clearly when dealer owners install our products on their own homes and offices and choose Maxeon for displays on websites and in customer showrooms. We signed up more than 100 US dealers since our last earnings call, including some of the most proficient and experienced sellers of IBC products. Keep in mind that it typically takes a quarter or two for our recently onboarded dealers to ramp their booking volumes with Maxeon branded products. We have also been aided in the US market by our successful engagement with some of the leading lease and PPA platform companies who have added Maxeon to their approved vendor lists and who are helping refer and onboard dealers seeking to combine our premium panel offerings with their financial products. Outside of our US channel business, we completed shipments to SunPower on the contract we negotiated last November. We do not currently have any further supply contracts in place with SunPower and our plan going forward is to address the US market primarily through our own dealer channel. In Europe, our sales team is still working through a continuation of the markets’ oversupply conditions that began in Q3 of last year. Our current focus is on keeping our core channel partners loyal and transitioning our performance line products to the latest TOPCon based version. I hosted 23 of our European elite dealers at our Mexico Modco last quarter and was pleased to find our top partner still very loyal to our product. Just like their peers in the US, many of them have Maxeon systems on their own homes and appreciate having a direct relationship with a high-quality manufacturer that has had a stable presence for nearly 20 years. These attributes are helping us maintain our historical price premium levels in percentage terms, but the region as a whole has seen dramatic price reductions so our absolute prices have also been affected. Due to the difficult market environment, our volumes are down year-on-year with the greatest impact in our lower-tier expansion market where we work through distributors and where we have a less direct connection with the channel partners. While we're not in a position to pinpoint when in 2024 supply and demand will rebalance, we feel good about our position with key dealers who understand the unsustainable nature of the current pricing environment. We're also pleased to report that our first storage product is gaining traction with elite dealers in Italy where it is sold as a bundled and branded offer. We look forward to providing more guidance on our beyond the panel products in future quarters. We believe our current strategies in DG and utility scale are on track to return the company to profitability early in 2025 based on our continued transformation activity, as well as our track record of technology leadership and unique go-to-market channels that together enable our premium pricing. Based on our experience over the past year, we also plan to focus on reducing customer concentration across our business to increase resiliency against market volatility. We look forward to an expanded relationship with TZE and their parent company TCL, whose financial strength, multinational presence and global operations bring considerable balance sheet support and manufacturing expertise. In the technology arena, we're seeing the industry moving increasingly towards higher performance platforms where we have strong intellectual property with patent portfolios covering Shingling, TopCon and IBC technologies. Regarding TopCon, we recently initiated patent infringement cases in the US against Canadian Solar, Hanwha Q CELLS and REC. This is part of a larger strategy to monetize our TopCon IP through licensing arrangements. While the emergence of TopCon as a mainstream manufacturing platform is a relatively recent development, our innovation around the underlying Passivated Contact technology dates back over 15 years. As a result, we have a robust portfolio of early fundamental patents covering both front and backside contact cell architectures. We also plan to vigorously defend our IBC patents and have actions against IKO already underway. Now let's turn it over to Kai to discuss the financials.

Thank you, Bill. I will discuss the drivers and details of the last two quarters' performance and then provide guidance for the current second quarter and full year 2024. Total shipments for the fourth quarter were 653 megawatts, just above our original guidance range of 610 to 650 megawatts. Deliveries to US utility scale customers accounted for roughly half of total shipments. Primary volume drivers were the ramp of performance line capacity and the settlement of the SunPower contract dispute, which negatively impacted our US residential volume during the quarter. Shipments of European DG customers remained a material portion of our overall business, accounting for more than 20% of fourth quarter volume. Shipments in this region increased approximately 8% quarter-on-quarter despite oversupply conditions at distributors, though on a year-over-year basis, volume was down more than 20%. Total shipments in the first quarter were 488 megawatts, which represents a 25% sequential decline and a 37% year-over-year decline. The sequential decline is attributable in part to the DG business, which is seeing a combination of overall demand softness impacting our US and European channel business for both IBC and performance line products. On a year-over-year basis, shipments were further impacted by the termination of our previous long-term supply contract with SunPower. Utility scale shipments were also down meaningfully in the first quarter due to customer project delays. Revenues for Q4 were $229 million, roughly flat compared to the previous quarter and inside our guidance range of $220 million to $260 million. We came in lower than our revenue midpoint, yet higher than our shipment guidance due to a combination of mix issues and ASP pressure in DG. Utility scale revenues were driven by ASPs consistent with our previous quarter and in line with customer contract terms. Our DG ASPs in Europe declined for the fourth consecutive quarter due to industry price erosion. Our ASPs in the region were approximately $0.40 per watt in the fourth quarter and hence well above market average, thanks to our continued focus on the premium segment, our direct-to-installer channel and products beyond the panel. ASPs for IBC products remained north of $0.60 per watt globally. For the year 2023, total revenues were over $1.1 billion, up 6% from 2022, driven by significant growth in our US utility scale business. In the first quarter of 2024, revenues were $187 million, 18% lower than fourth quarter 2023 levels. Utility scale revenues were nearly unchanged sequentially, but DG declined at a rate generally consistent with volume decline. DG ASPs in the first quarter benefited from the final shipments to SunPower and overall IBC pricing remained above $0.60 globally. However, blended DG ASPs were impacted by inventory sales of our performance line 6 products ahead of the P7 launch this year. We also saw a higher mix of DC versus AC shipments. Non-GAAP gross loss in the fourth quarter was $10 million, in line with our original guidance of $5 million to $15 million. US utility scale saw minimal sequential change, while Europe and Australia DG declined. Our gross margin in these markets is being impacted by several of the company's capacity transformation initiatives and efforts to sell-through the remaining P6 inventory. On a GAAP basis, gross loss was $34 million, due to restructuring impacts related to our capacity transformation austerity initiative. Despite headwinds in the second half of the year, Maxeon's total non-GAAP gross profit for 2023 was $104 million or 10% of sales, which amounted to a $135 million improvement over 2022 levels. Cost reductions and ASP improvements in our utility scale business were significant drivers of the year-on-year improvement. First quarter 2024 gross loss was $13 million on a non-GAAP basis and $15 million on a GAAP basis. These results represent sequential improvement on a GAAP basis from comparatively less restructuring impact but a decline of nearly $3 million on a non-GAAP basis due in part to lower DG revenue levels and profitability. GAAP operating expenses in the fourth quarter were $141 million, including restructuring charges of $103 million primarily in connection with our previously announced capacity transformation, which includes ramping down our Maxeon 6 IBC cell capacity and converting our Maxeon 3 IBC cell capacity in the Philippines to our latest generation Maxeon 7 technology. Non-GAAP operating expenses were $37 million in the fourth quarter, coming in slightly better than the midpoint of our guidance. This reflects austerity measures that we put in place in the previous quarter. First quarter 2024 operating expenses were $49 million on a GAAP basis, due to restructuring charges from a reduction in force the company executed in March. Non-GAAP operating expenses were $39 million in Q1, similar to our result of $38 million in the same period of 2023. On a year-over-year basis, the company has become more efficient in its corporate functions, while expanding US DG sales and marketing expenses to support selling increasingly through our own channels, which facilitates higher ASPs and lowers customer concentration risk compared to our previous model in the US, where we sold almost exclusively to SunPower. Adjusted EBITDA in the fourth quarter was negative $38 million, slightly worse than our original guidance range, partially due to a lower add back of depreciation charges as a result of our restructuring related asset write-off in Malaysia. Net loss attributable to stockholders came in at $186 million compared to $108 million in the previous quarter. The sequential change was impacted by $104 million in higher restructuring charges and $27 million in lower remeasurement loss on our prepaid forward. Adjusted EBITDA for 2023 came in at $4 million versus negative $109 million in 2022, mainly attributable to an expanded gross margin. In the first quarter of 2024, adjusted EBITDA was negative $39 million or $1 million lower sequentially, mainly due to the aforementioned decline in gross income. Moving on to the balance sheet. We closed the fourth quarter with cash, cash equivalents, restricted cash and short-term investments of $197 million compared to $277 million at the end of the third quarter. Cash levels were negatively impacted by $83 million of previously collected cash advances from US utility scale customers that were amortized during the quarter and show up in our cash flow statement as a change in contract liabilities. A sequential reduction in inventories from $386 million to $309 million favorably impacted cash. This was largely driven by our settlement with SunPower, which allows us to resume shipments in mid-November, which came straight out of inventories that we had accumulated in the previous quarter after we bought shipments in August. As a result of this change, DIO went from 149 days in the third quarter to 120 days in the fourth quarter. Total operating cash flows in the fourth quarter were negative $76 million, excluding the aforementioned changes in contract liabilities and cash restructuring charges, the business generated positive cash of $16 million during the fourth quarter. Cash, cash equivalents, restricted cash and short-term investments stood at $105 million at the end of the first quarter. Operating cash flows were negative $73 million during the quarter. This was driven by the company's adjusted EBITDA result and the negative $67 million impact from amortization of contract liability, positively offset by improvements in net working capital. Inventory levels further decreased to $272 million, as we shipped another 49 megawatts of product to SunPower straight from inventory, but this benefit was diluted by an increase in US utility scale inventory that occurred as a result of delays on the customer side. DIO in the first quarter was 131 days. Excluding charges and contract liabilities and cash restructuring charges, the business generated $8 million in positive cash in the first quarter. Capital expenditures came in at $12 million in the fourth quarter, consistent with our guidance range of $10 million to $20 million. 2023 capital expenditures totaled $67 million compared to $63 million in 2022. A significant portion of the 2023 CapEx was related to our performance line capacity ramp. In the first quarter of 2024, CapEx was $19 million, a $7 million sequential increase as the company took steps towards upgrading the Maxeon 3 lines to our 7th generation IBC technology. Taking a step back, we are deeply disappointed by our negative EBITDA results over the past three quarters after our successful efforts since then, which facilitated strong earnings momentum in the first half of 2023, as well as our first positive annual EBITDA result as an independent company. As Bill mentioned, the dramatic industry-wide reduction in pricing and demand since the middle of last year has had a material negative impact on our liquidity position at a time when we also encountered significant previously scheduled amortization of our utility scale prepayments amounting to a total of approximately $150 million in the fourth and the first quarter alone. In response, we have implemented various restructuring efforts that give us line of sight to achieving healthy profit margins again starting in 2025, as well as our financing efforts, which we expect will stabilize our balance sheet while we continue the necessary transformation initiative. Despite some further prepayment amortization and expected negative adjusted EBITDA in the near-term, we project cash levels will exceed $100 million once the new equity from our shareholder TZE has funded. Subsequently, we target to maintain a cash balance above $100 million for the foreseeable future, thanks to those funding transactions, continued focus on working capital management and additional sales from inventories. We expect to exit this year with the peak of our prepayment amortization schedule behind us and with a rebuilt US DG channel contributing healthy gross margins. We have revised the ramp schedule of Maxeon 7 slightly to preserve cash and allow the business to build the US channel with cash-generating sales from existing inventory. With this context in mind, I'll now discuss our expectations for Q2 and the full year. We project second quarter shipments of between 520 and 600 megawatts. US utility scale is projected to increase sequentially, as we've been able to pull in the demand from one customer to offset the previously mentioned pushout by two other customers. Our US DG channel is projected to grow nicely on a percentage basis this quarter, albeit from a low base and with more significant volumes projected later in the summer as key new dealers complete onboarding processes. Our European DG business is projected to post sequential growth, yet will be down year-over-year due to market conditions. Second quarter revenues are expected to be in the range of $160 million to $200 million. The midpoint of revenue and volume guidance implies a blended ASP decline from $0.38 to $0.32 per watt sequentially that reflects a drop in US DG volumes due to the transition from SunPower to our own dealer channel and the preparation of the European DG channel for the transition from P6 to P7, which includes strategically selling older P6 inventory into Tier 2 markets at discounted prices. Licensing our Shingling IP as part of the HSPV sale transaction is costing $10 million in revenue to the second quarter. Non-GAAP gross loss is expected to be in the range of zero to $20 million due to high inventory levels and low demand from our traditional channels. We have recently decided to sell certain IBC products below our usual ASP target into carefully selected channels in order to generate cash conversion. We expect that this will require us to recognize a non-cash charge of approximately $20 million in the second quarter for writing these inventories down to their future net realizable value, which is included in our guidance. We expect gross margins to improve for the remainder of 2024 and into 2025. GAAP operating expenses are expected to be $45 million plus or minus $2 million. Non-GAAP operating expenses are expected to be $37 million plus or minus $2 million, having executed a reduction in force this March. We believe the company's current OpEx levels are generally sufficient on an absolute basis to ramp both DG and utility scale businesses to a considerably higher volume to achieve our EBITDA target in 2025. Adjusted EBITDA in the second quarter is expected to be between negative $31 million and $51 million. Excluding non-cash charges for inventory adjustments, this represents an implied sequential improvement at the midpoint consistent with our gross margin guidance. Second quarter capital expenditures are projected to be in the range of $15 million to $25 million and distributed across a small number of projects, including Maxeon 7. For 2024, we project annual revenues of $640 million to $800 million, which assumes growth in our US DG channel that is more than offset by a lower utility scale volume in the back half of the year that reflect our current delivery schedule revised for the project delays we discussed. Adjusted EBITDA is expected to be in the range of negative $110 million to $160 million with sequential improvement every quarter from a trough in Q2. 2024 capital expenditures are expected to be in the range of $70 million to $100 million.

Thank you, Kai. We appreciate the investment and support from TZE announced today. We believe that the difficult steps we are taking to reinforce our balance sheet are necessary to protect the interests of all Maxeon stakeholders and position the company for future success. In light of this refreshed capitalization, we are optimistic about our ability to complete our transformation and return to profitable growth. Now let's go to Q&A. Operator, please proceed.

Thank you. Our first question comes from Philip Shen with ROTH MKM. Your line is open.

Hi, everyone. Thanks for taking my questions. First one is on the DOE loan guarantee. I was wondering if you could update us on what the situation is there. We haven't heard about that in a while, at least not that I've seen. So sorry if I missed something. But with transactions and now the ownership of TZE being greater than 50%, does that impact the potential for you to secure the DOE loan guarantee? Thanks.

Yes. Thanks, Phil. Yes, we're still very committed to our Albuquerque, New Mexico project and we're better capitalized now to execute on that. Our DOE application is still advanced and live, and we're continuing discussions with DOE. We are mindful this transaction might present some new challenges, but we believe there are scenarios that will allow us to proceed with the DOE.

Okay. So on that latter point though, can you give us some more color on what those potential alternative funding sources or transactions could be?

Yes. I think it's too early to really say much about that, Phil, except that we are definitely better capitalized now with this new round of investments.

Okay, thanks. Shifting to the project cancellations or pushouts, I was wondering if you could give us a little more color. I know there was a 6-K out on the Origis contract cancellation. Was it possible that you guys could have known about these delays earlier since modules are one of the last elements to be added to the project? So I guess I have a series of questions here. I might just read them. One, was the installation of modules supposed to take place? Does Maxeon have a max notice period after which customers can't delay deliveries? And why did one customer cancel? Do they find it much easier or cheaper to go with an alternative? Is there a risk that the rest of the backlog could also do that? Thanks.

Hi, Phil, this is Peter. I'll take this one. So we had a 1.2 gigawatt contract with Origis as we disclosed in our 6-K that was scheduled to start delivery in Q1 of this year, ramp up in Q2 and then proceed through the end of 2025. We were informed early this year that the company would not be in a position to accept those deliveries under that contracted schedule. I certainly won't speak to the motivations, our understanding was that it had to do with the delays on their projects. As we said, we've terminated the contract and are pursuing damages.

Got it. You mentioned that you can't discuss motivations, but can you provide some insight into the delays on their projects? Were they caused by issues with interconnection, queuing, or long lead times for high voltage equipment? Or was there a last-minute surprise? If you're planning to ramp up in Q1 as expected, did something happen at the last moment, or did they possibly switch to another module source because of price declines?

Thanks. Phil, I can't provide too much detail about our customers' projects, so I recommend you speak with them directly.

Okay. All right. In terms of normalized revenue and EBITDA, can you speak a little bit more about that? What should we expect? Price declines have effectively stopped, and so maybe rest of world outside of the US, it seems like we're not going to get any more deceleration on pricing. And then in the US pricing has flipped around and is likely going higher. So I was wondering if you could speak to a little bit of without giving guidance, but what normalized quarterly revenue and EBITDA could look like in the medium term? Thanks.

Hi Phil, it's Kai here. So beyond the guidance that we have just given for the second quarter, and we've also given yearly guidance as you have seen. From that, you can see that we foresee for the rest of the year, still some challenges on the revenue and adjusted EBITDA side. Revenue generally is going to be driven by some of the cancellations and push out that we have experienced in the power plant business. We were successful plugging some of the holes in the near-term here in the second quarter by pulling in some other deliveries. We are looking for further customers towards the second half of the year to build the volumes. In the meantime, we have slowed down the production until we can see the demand and we can lock in further demand that is available at a good cash margin for us. So that's going to affect, I think, the revenue for the rest of the year. As we said, in 2025, we are looking at turning positive on an EBITDA basis early in the year. So we expect 2025 to mark a return to adjusted EBITDA based profitability here and also further growth on the revenue side quarter-on-quarter in 2025.

Okay. Thank you all for the detail. I'll pass it on.

Thanks, Phil.

Thank you. Our next question comes from Pavel Molchanov with Raymond James. Your line is open.

Yes, thanks for taking the question. So following up on what Phil asked a minute ago about the DOE loan talks. Given that the company will be majority owned by a Chinese entity, does that complicate the process of getting a loan guarantee from the US government?

Yes, it does complicate the process. But as I said, we believe there are still scenarios. And again, we're working very closely with the DOE on this, where they will allow this loan application to proceed. And again, the loan application itself is very advanced at this stage. So this is obviously a fairly big change for the company today. So we just have to work through that with the DOE.

Right. This is kind of a housekeeping question, but given the complications in the capital structure, what is the share count once all of these structured financings are concluded? So let's say July 1, what kind of share count are we looking at?

Hi, Pavel, it's Kai. There are obviously a few things and also some moving parts, which are going to make it difficult to predict the exact share count here. But I can say there are some pretty detailed disclosures out there in a 6-K with audio related documents attached. But just from an overview standpoint, a big variable here is the share price and also the sequencing of some of the conversions, which are at the option of some of the security holders. But just in broad strokes here, we will have the new CD by TZE $97.5 million that will be set on a 10-day period from a conversion, but that only becomes due in 2029. The conversion price of the existing 2027 notes that are held by TZE will be reset based on the same scenario. The maturity is going to be pushed out from 2027 to 2029. Then the exchange of our existing 2025 notes into a $196 million nominal of those $200 million at 2025 notes. There are two tranches, and one of them, the tranche A is $137.2 million and that's going to be convertible into $347 million of the company’s shares. The tranche B, which is $64 million, is going to be set based on a new scenario here. TZE will also be issued a warrant, which will maintain TZE's shareholding level stable at the current level of 23.5%. As I said, quite a lot of moving parts here. We need to ask you to do the math and make your own assumptions around these things, but there are lots of disclosures out there that work.

Okay. Last question. To get to positive EBITDA in early 2025 as you indicated, what specifically needs to happen? Is it kind of macro module pricing dynamics or is it improving capacity utilization at your existing production plants? What are the variables?

Yes, there's a lot of factors going on. I would say, first of all, we're not planning any dramatic recovery in pricing. We've taken it, especially in Europe, a pretty sober view of how long that will take. I think we are starting to see some tailwinds here in the US driven by policy that in particular should lift our utility scale pricing. But the big factors for us are introducing some refresh technologies, both the Performance Line 7 technology and the Maxeon 7 technology have just recently been released and are starting to gain traction. A big factor for us is rebuilding our US DG channel. We, of course, lost the SunPower contract late last year and we've completed deliveries of all that product to SunPower at this point. But we're just getting going with rebuilding that channel. Historically, Maxeon product has had a 10% market share in the US and we're quite optimistic we're going to get back to that and probably exceed that over the next several quarters. But it will take some time. Once we get there towards the end of this year, we think we're going to be very much more advanced than we are today. That's going to help us a lot on the bottom line. It's still the best market in the world is the US. Again, we have a relatively strong position here. We've got a team that really knows how to do this, is very experienced in the selling proposition through our dealer channel. So we're confident that that's going to help drive things in a more positive direction. On the utility scale side, it is more about getting fully into these higher price contracts that we're starting to execute on. We're close to finishing all the restructuring that has had to occur with the Origis cancellation. We are still very confident in our remaining contracts and expect those to more fully load the factory, particularly into next year. We are also transitioning that technology as well to the latest generation TOPCon based product, which we believe will be very competitive.

Got it. Thanks very much.

Thank you.

Thank you. Our next question comes from William Grippin with UBS. Your line is open.

Thanks very much. Good morning. My first question was on some of the recent developments with respect to your patent infringement suit against a company. It looks like that didn't go your way. How are you thinking about your approach to defending your IP going forward? And maybe how does this decision impact your thoughts on which markets you'd like to focus on going forward?

Yes, that outcome was not a particular surprise to us. We were trying to get an injunction, but as most of you know, the bar for getting a preliminary injunction is usually a very high bar. I think we didn't quite clear that bar, but we believe the merits of our case are still fundamentally very, very strong and we expect to ultimately prevail. We are expanding action in other markets as you've seen, both on our TopCon and our IBC patent portfolio. Maxeon's history dating back to the SunPower days has invested tremendously in R&D, hundreds of millions of dollars over the years. I think we have probably the largest IP war chest of any solar company out there. Now as other companies start to move into our space of high-performance solar cells, we're going to take action on that portfolio that we've invested so much in over the years. Again, we're really confident it's going to help us in markets all over the world. We even have strong patent portfolios in China. So Europe, US, China, rest of world, we're going to stand our ground and defend this portfolio and monetize it.

And Will, this is Peter. I'll just add a little bit there. The news you were referring to, as Bill said, related to a request that we had made for a preliminary injunction in the Netherlands. There were some questions raised about the testing done. We're appealing that decision. We think the underlying structure is very clear and infringing. We also have pending actions in Germany. Although the initial decision about a preliminary injunction did not go our way, that does not relate to the eventual outcome of this infringement case in any of the jurisdictions we're pursuing.

Okay, thanks for that clarity. My next question was just on your comfort around potential exposure to any incremental import tariffs and maybe how the increased ownership by TZE might impact your efforts in your discussions with regulators there?

Operator, can you hear us now?

Yes. Please proceed.

Yes, you were asking about import tariffs, correct?

Yes. Do you need me to repeat the question? I'm not sure if I got cut off there.

Yes, please repeat it.

Yes. I was just asking about your how you're thinking about your potential exposure to incremental import tariffs, right, as we obviously have this new AD/CVD case out there. And maybe how does the increased ownership by TZE potentially impact your discussions with regulators or maybe their perception of whether or not Maxeon should be subject to any of these new tariffs?

Okay. This is Peter. I'll take that. There are a couple of aspects regarding tariffs. One concerns the 201 bifacial exemption and the other involves the new AD/CVD filings, both of which are specific to certain countries. Let's first discuss the 201 bifacial exemption. When President Biden issued his 2022 proclamation, he instructed USTR to seek accommodations or country exclusions for Mexico and Canada. This has already been addressed for Canada, and we are collaborating closely with the Mexican government and the US administration to expedite this process for Mexico. This matter is primarily about country-specific issues stemming from the original NAFTA relationships, rather than being company-specific. As for AD/CVD, these are also targeted country-specific measures aimed at four countries in Southeast Asia. It’s still early to determine how this will unfold; we are actively discussing this with all involved parties but don't have any comments yet regarding the potential outcome. We anticipate some preliminary decisions may emerge in late Q3. Regarding our situation, the key focus for the administration is on creating jobs in the US and reshoring the solar supply chain. As Bill mentioned, we remain committed to this objective and we'll need to see how it affects our new capital structure.

All right. I appreciate the time. I'll pass it on. Thank you.

Thank you. Our next question comes from Donovan Schafer with Northland Capital Markets. Your line is open.

Thank you for taking my questions. I want to start with the situation regarding TZE, which is likely to become a majority shareholder. Additionally, there is the divestiture of HSPV alongside specific licensing agreements. I understand that they have begun ramping up P series production in China. The intellectual property you hold is based in Singapore. When TZE first became involved following the spin-off from SunPower, there were concerns about potential access to and control over the P Series and IBC intellectual property. My question is, if Maxeon is essentially functioning as a subsidiary of TZE now, what assurances do we have that they will prioritize Maxeon as the main benefactor of that intellectual property, rather than pursuing other avenues to monetize the IBC or P Series shingled technology?

Yes. Hi, Donovan. Thanks for the question. Yes, well, I think as you know, TZE has been a very large supporter of Maxeon since the spin. I think they've always valued us as an independent company with unique access to the Western markets through our channels and really a technology leadership position. So I don't think they want to change that fundamental way that we operate. They would like us to continue to operate under the Maxeon brand and SunPower brand internationally. They believe in our team and our technology. What they view is that this increased involvement will provide synergistic opportunities. They have, for example, with HSPV that you mentioned, they've scaled that within China to very large scale gigawatts, many gigawatts, and we're the beneficiary of that due to our offtake agreement, commercial offtake agreement with HSPV, where we get our performance line panels that we sell into Europe and the rest of the world at very competitive prices and cost structures. We hope that this partnership will be synergistic. They'll help us bring the ability to scale and get to the cost structures we need, but their full intention is to keep us as an independent operating company that has unique access to markets like the United States.

Okay. And then the way the language is written with respect to the choices that were made around raising capital, it would seem to be suggesting that this was seen as kind of the only option after evaluating others. But among the set of possibilities that you evaluated, did you guys evaluate or consider or look at doing some kind of an IP backed loan? And if so, can you share what drove the decision to not go down that path?

So Donovan, it's Kai. We said we looked at a multitude of different possibilities and alternatives. We're not going to go into the details here. But really what we have announced today was the only credible alternative that was identified and provided the amount of long-term capital required at the same time delevered the balance sheet and safeguarded the company's ability to continue as a growing concern. So, that's the announcement we made today, and we strongly believe that this has been the only credible option that we have seen.

Okay. All right. Thank you, guys. I'll take the rest of my questions offline.

Thanks.

Thank you. Our next question comes from Maheep Mandloi with Mizuho. Your line is open.

Thank you for accommodating me. I wanted to clarify the guidance, which suggests a similar revenue and EBITDA run rate for the second half. When do you anticipate reaching positive EBITDA, and what factors will contribute to this? Additionally, you mentioned favorable pricing in new bookings. Can you provide details on whether this is around the mid-30s for the US Utility project? Thank you.

Well, in general, I can say that as Bill explained before, the turnaround of our EBITDA, getting back to full capacity and also taking advantage of better pricing generally in the US power plant is going to be a big part of that turnaround. Maybe I'll hand it over to Peter here to talk a little bit about the pricing environment.

Yes, Maheep. As you mentioned, we have observed considerable upward pressure on pricing in the utility scale business. We do not typically share specific numbers as we have a limited number of customers, and we treat that information as confidential. It's important to note that we have a substantial backlog extending into 2025 and options available through 2027. Some of our pricing has already been established. Fortunately, those contracts were finalized when prices were higher, before the recent decline over the past year. Both our current contracted backlog and the additional future volume we are pursuing are secured at strong average selling prices.

Got it. I'll take the rest offline. Thanks.

Thank you. As there are no further questions, we will now conclude the call. Thank you all again, you may now disconnect. Have a nice day.