So welcome everyone to SunPower's second quarter earnings call. My name is Siobhan Hickey, SunPower's VP of IR, and I would like to review a few housekeeping items before we begin. All lines have been placed on mute at this time. This call is being recorded and a replay will be made available within the events section of the SunPower website. Please note that today's presentation may contain projections and other forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in our statements. In addition, we may discuss certain non-GAAP and financial measures. A reconciliation of any differences between those non-GAAP financial measures and the most directly comparable GAAP financial measures are available within our press release. Lastly, we will hold a question and answer session after the end of formal remarks today. For those watching via the webcast, you may submit a written question at any time via the submission box located on the right side of your screen. For those joining our live Q&A, please click the raise hand icon located at the bottom of your screen to enter the queue. With that, I will turn the call over to T.J. Rogers, SunPower's Chairman and CEO.
Morning. My name is T.J. Rogers. I'm the CEO of SunPower. We're here to report the second quarter. I have people who present various parts of this meeting, so I will introduce them real time. Starting with Tom Kowalczyk, who's our new CFO. He's got a CPA and a Chicago MBA. He's had experience in public companies, and he's down here, Beam Centauri. And he led a finance group there with $2 billion in annual revenues. So he's got the experience in public and big company. This is his first shot at being the CFO of a public company. He's going to present the financials today.
Hi, good morning. Thank you, TJ. I'm very excited to join SunPower at this opportunity to be a leader at the group at this very important time. Over the last few weeks, I have been focused on getting to know the business, our operations, our finance organization, as well as meeting the talented people across the company. While I'm still early in that process, I've been encouraged by what I've seen and the team's commitment to improving execution. And going forward, my priorities are pretty straightforward, maintaining strong financial discipline, improving the quality of our forecasting and financial processes, as well as allocating capital thoughtfully and ensuring we provide investors with clear, timely, and consistent financial information. I look forward to partnering with TJ and the rest of the leadership team as we execute our strategy, and work to create long-term value for shareholders.
So, I've asked Tom to, this is the report we issued this morning. I've asked him to go through the financials with you. There's GAAP and non-GAAP. We focus on non-GAAP. That's how we've reported all of our quarters so far, Tom?
Yes. So, our non-GAAP revenue is down from $73 million down to $56 million, which had a direct impact on our gross margin and gross profit down from $46.9 to $27.6. uh that's a direct result of our of our fall through on variable cogs and revenue uh however we did uh offset much of that through uh improved operating expenses which is down about 19.7 million dollars of which 7.1 approximately is is fixed uh overheads that we cut out of the business during the quarter and is expected to carry into the future. Our operating income is slightly improved, which is a combination of our ball through because of the change in revenue, as well as the improvement and cost cutting that we did during the quarter. So net-net, we're better than the previous quarter on operating income non-GAAP by about $400,000.
So from my perspective, we need to explain a disaster revenue quarter today, and that will be my job today. the good news if there's any is that we had a huge drop in revenue but maintained didn't change our profit it went from bad to staying bad and that was because we have done structural cost cutting of 31 minus 24 7 million bucks and I'll talk about that in future plans for structural cost cutting later as well um i took this shot at um 7 7 17 this morning my time and um the word is you didn't like it i don't like it either it's not good performance and if you look at the company basically we're six quarters old and we've been at a buck and a a half, plus or minus a half a buck forever. And the last two quarters have been bad back-to-back. That, of course, is bad and bad that we just talked about. And that's impacted our share price. So I'm going to talk about why that happened, what we're going to do about it in detail. Next is Dan McCraney. He's a board member. He's become active working in marketing and sales for us. He's a storied Silicon Valley figure. He's been on 10 NASDAQ boards, and this includes the two halves of Motorola when they split apart. Important companies. I knew him because he spent about a decade at Cypress. He's been a CEO, and his forte is marketing sales.
Speaker 7
Thanks, TJ. Okay, what you're looking at here is total bookings with the corporations from Q4 2024 through our most recent quarter, Q2 2026, measured in terms of jobs. This is all SunPower, which includes our residential work, as well as our new home work, as well as our commercial work. So what you're seeing there is an aggregate of all three of our business units going forward. As you can see from Q4 2025, Q1 2026, and Q2 2026, we've had a strong increase in bookings. This bookings increases now nine straight months, generally across the board. As a result of that, going forward into this quarter, you're seeing our projections for revenue, which is largely based on how much of the bookings we're able to get through to the factory installed and revenueed. That's going to be the challenge, the primary challenge for Q3 is getting these bookings revenueed through installation. One more point on that. You notice in Q1, 2026, we were at 4,166 jobs. In Q2, 2026, that number dropped to 3,655, still the third highest in the six quarter or seven quarter period. But I wanted to point out that the transactional short-term bookings, which is the bookings for solar, actually increased in Q2. What dropped is our long-term new homes bookings, which we don't really see revenue for five to six to seven quarters. My point of that is for an opportunity, for short-term opportunity, the sales force continues to book the short-term opportunities, residential, that allow us to have a good Q4. Finally, we are about, it takes us about eight weeks approximately to convert our jobs to revenue in residential. So therefore, the sales force right now is predominantly working on the Q4 bookings to ensure we have a robust Q4. So that's where we stand. Three strong quarterly bookings. If you talk about the transactional bookings of residential only, we've had three record bookings.
So we're talking about a lot of bad news today, but I do want to point out that But what we've been talking about is good times ahead of us because of bookings, and that's still true. So I wanted to bring up that slide early. This is a picture of a headcount in the sales department.
Speaker 7
So in this one, this is our total 1099 sales organization broken out by SunPower, Sunder the acquisition we did back in September 2025, Ambient the acquisition we did in October 2025, Pure Light, which was a small acquisition we did in Q1 of 2026, We are holding our 1099 headcount reasonably at about 1,500. We've made geographic changes in that headcount. We are now moving into the higher opportunity states, especially for TPO. That would be, of course, Texas and California and places like Pennsylvania and Virginia. So we've redeployed our 1,500 1099s to maximize bookings, and that's what you're seeing right now. So we're to a first order. We're about flat with our 1099s at a very robust 1500, but we've moved them around to areas where there's currently high opportunity for immediate bookings.
The main point here is that old SunPower, by that I mean the SunPower that went bankrupt, had a large sales force. But when they went bankrupt, that sales force started the trading. And we worked very hard to maintain actually a higher, bigger sales force of 1099s. I thought I'd talk about myself today and show my picture. This is back when I was in high school. and I thought about it because I just saw a movie called Young Washington and it was a good movie although the critics because it was about an American hero didn't like it and there's a classic line in it in 1755 George Washington got his ass kicked in Ohio by the French and Indians in the French and Indian War and he was the head of the Virginia militia And he came back and talked about the problem he had. They burned his fort. They killed a lot of his people. He really lost. And he signed a peace treaty that was written in French that was misled to it. He was misled by what it said. And it had, it was a bad contract. Let me call it that. And when he was making excuse to the governor of Virginia, which was his boss, the guy was, as he was making excuse, the guy was waving his arms like this guy's name was Dinwiddie. And he said the line of the movie I thought was great to lead is to forfeit the right to make excuses. So that that's where I am this morning. I can bitch about this or that. And this didn't happen. That didn't happen. And then, of course, the rebuttal will be great. wait, why did you not fire the guy before he screwed stuff up? So I want to make it clear right now, I run the company. This is my problem. I graduated, so who am I? I graduated from Dartmouth in 1970. I was second in my class. I was eight years on the board of directors, the board of trustees of Dartmouth. I went to Stanford. I got my Ph.D. there. I'm a Moore's Law guy, silicon guy. I work for two chip companies, American Microsystems, where I learned how to do engineering and R&D and advanced micro devices run by the fabled Jerry Sanders, where I won't say that I learned about sales, but I did come to appreciate the value of sales. Dan and I both worked at that company at one time. I then, for my, in effect, whole career, founded a chip company, Cypress Semiconductor. We IPO'd 37 months from our funding, including building a fab. We went public at the $770 million valuation of today's dollars, and in 2020, we sold, after I left and retired, the company sold for $10 billion. After that, I worked on the Enphase turnaround. Enphase is worth $5 billion today. So, how am I related to SunPower? I've written checks, literally, for $111 million. I hold outright 32.7 million shares, and I hold debt equivalent to another 26.5 million shares. So I'm looking at, like, 39% ownership if I converted my debt, which I don't want to because it's income for me. I have no shares that I've earned because of my position getting paid with stock and my salary zero. So the point is, making that number better is all I work for. If you think about economic motivation, obviously I want this company to succeed. I have to remind you that we're in a good time for solar. And when you have a coat of tar over everything else, it's difficult to see through it, to see the good time. This is a graph, the Energy Information Agency of the United States. It talks by area of the United States and averages for the United States of solar penetration rates, meaning in 2024, only 5.6% of the houses in the United States were qualified, rich enough, right area, right zip code, good laws in the state, meaning 95% of the homes did not have solar. They could have had solar. This number has been updated recently. The 2026 update is 7% up from 5.6. So, that's 7, therefore 93. And there's a forecast by the same outfit, EIA, that it will be 30% in 2030. I think that's a little bit aggressive. But the point is, even in 2030, 70% of the market will be unsatisfied and will be wanting solar. And by 2030, that's four years, you take a 10% raise per year, take 1.10, raise it to the fourth power, and you've got the cost of power that people are going to have to pay going up by 50%. Meanwhile, the cost to install solar is flat to down and has been, if you look at a four-year ruling average forever. What that means is solar energy is number one in addition to our portfolio of energy generation. So here I show gigawatts. If you want to calibrate that, this is of added solar additions. If you want to visualize gigawatt, think about a nuclear plant and think about that giant dome, and there's usually two of them, each of them are worth a gigawatt. That's a cooling tower for plants. So 70 gigawatts is a lot of power that was added on 35 nuclear plants equivalent. You can see natural gas is fading. I don't necessarily agree with that, but that's what's happened. And wind and solar are growing solar you can see here in the bottom is growing the fastest and you really can count battery storage as part of the wind and solar phenomenon because you have to store the energy when the wind is blowing or when the sun is out so this is also renewable so bottom line we're having a renewable transition like it or not debate it this this is where the market is and and i frankly think it's right i think the fact that you can buy solar panel for 100 bucks and get 500 watts of power out of it when the sun is shining is a big deal. The thing that people have talked about and they don't realize is there's two kinds of payback. Energy payback, which is seven-ish years for buying and installing solar system. And then there's financial payback, sorry. And then there's energy payback. And energy is do you ever get the energy back you get from melting glass and purifying aluminum from the panel? And the answer is the energy payback time is about a year. That is, the panel will produce more energy than it took to produce it. So the fundamentals are all there, and they're all lined up. This is from Ohm Analytics. Ohm is sort of the go-to data source. I'll just make two points here. Photovoltaic pricing trends. And, of course, they look at the pipeline, and you can see it's flat. So there is no big crash coming in solar pricing. The reason for it is the government subsidy is gone. I was happy about that. And as a matter of fact, there will be a short-term, slightly upward trend because of that. Second one, and this is a bad one, this is monthly residential commits. So here we have, by month, going up to May of this year, this little peak back here is Safe Harbor. This is where everybody was buying and installing, you know, one bolt in order to guarantee that they would get ITC credit. And then after that got done, then we went into the current new equilibrium with lower funding, 30% gone. So the reality is, if you eyeball this, 25,000 installs has gone to, let's say, 15. And this is what we're dealing with in the solar industry. We've got a significant fraction. Think a third to a half of our companies have gone out of business because there's a lower volume at the very same time. There's a lower volume and the tax credit is gone. So the double whammy is pretty much unemploying a lot of people. Okay, so we've responded to that with $13 million in cost reductions. After Q126, the first of the back-to-back bad quarters, we did a riff. We implemented a four-day work week. The reason for this is we knew we were coming up to needing those people. Therefore, laying them off and bringing them back was not proper, so we went to a four-day week to keep the people, have the lease layoffs, and we also did some structured cost cutting. That was $7.1 million that Tom showed you on the first slide. this quarter we're going to do another 5.9 million and it'll be focused mostly on management where we have new homes and cobalts and we have two sets of managers and we will rationalize that and that now reports to john berg who's going to address you later so uh have we are we fat and the answer is no we're not we never have been this is a graph of our head count When I took the thing over in Q4, I inherited 3,500 candidates to work there. We said we can only deal with a third of them. And then we lowered this over time as we learned how to run with a leaner team. Right now, we're targeting 700. We're at about 710. So we have a lean company. And if you went into our place, you would see people working their butts off. Last weekend, weekend before last, 64 people worked overtime, which is efficient for the corporation. It's good for them, especially in a four-day work. Okay, so the cost reductions, $13 million, describe the two components of that, last quarter and this quarter. I'd now like to start talking about the overriding thing for us, the technology and capability. Let me call it the architectural capability, engineering capability we have, which will drive us forward with better pricing. So I'd like to introduce Surrender Betty. He is nominally our EV of quality, but we can't afford to have VPs, including me. My wife and I typed the words in this report. We can't afford to have single-purpose, expensive people. So in addition to working on quality, he looks at future engineering. He's an expert on panels. And I've asked him to describe highly awarded, worked at Intel and applied materials, Silicon Valley guy. He has his own patents. I've asked him to describe our new panels and why they make a difference. Surinder, you're up.
By the way, this is, we call the panel, our trade name is Monolith. This is a picture of a billboard on a major freeway in Salt Lake City when we announced that we had the monolith.
Speaker 3
Thank you, TJ. So, what I'll be talking about, the SunPower REC JDA technology partnership, which we have engaged in the last few months, and that has really provided us huge dividends in terms of developing a high-voltage heterojunction technology product, which is a 470-watt panel. and it's got a unique technology in terms of hybrid technology where we allow the silicon, the anti-silicon wafer, and it is being sandwiched between the amorphous silicon and at the same time it's got a very strong superior preservation. This technology allows us to be one of the best technologies in the market today especially for the bifacial gains and i'll talk about that in a minute as well so the monolith 470 watt panel through this jda technology partnership where the two companies rc and sun power with their innovation have come together and we have launched during q1 this particular product line it is being commercialized right now for residential or light commercial for various applications today, and our intention is to expand this business throughout this year. It's also got a very unique features. I want to take a minute to talk about that. The module efficiency is pretty good, 22.6, which allows us to have a huge power density advantage in terms of the watts per meter square. It's got the advantage of temperature coefficient. it's got the low light enhanced performance both morning evening cloudy and so on with a low degradation and huge warranty advantage as well so putting this together all the different technology advantages from a heterojunction technology using the n-type cell we've got the most powerful 470 watt panel today in the market and we are proud of that moving forward we are already developing in parallel we have done some engineering work we have some engineering samples built and that is we call it monolith 2 bifacial which is coming soon here the advantage we are bringing is that we are taking double glass structure to ensure that we have the bifacial advantage. So this allows us to improve our module efficiency. At the same time, it allows us to make the panel with the performance improvement, the boost we have, taking it, you know, another higher level to 494 to 528 watt panel. It still remains the same lightweight, 50 pounds, very sleek panel with a 2.0 meter square area and the glass has been reduced but it has been doubled we call it double glass both on the front side and the rear side and that allows us to have the power density advantage and you can see on you know we we are have an objective to demonstrate the advantage on both the residential application as well as in the commercial side by having a double glass product you have a much more reliable product because you don't have a plastic you know layer behind which we call it backside but and because you have a double glass it allows you to have a stronger structure to handle all the different environmental condition as well as on the fire resistance side the warranty is also improved from 25 to 30 years and we believe If by having this combination of technology advantages along with bifacial advantage, you have basically designed in a best-in-class product line with a high output over lifetime. And that gives us a huge advantage in terms of cost per kilowatt hours, transforming the innovation into customer value. So this is the quickest snapshot of what we have developed.
So now that you physics students in the audience have gotten your notes, I'd like to just make a couple points. This has made a difference for us. All Chinese cells up to about a year ago were P-type holes, and holes move three times slower than electrons. This is a big deal. We've always been since 1985 on N-type silicon, way ahead. That gives us superior efficiency. This temperature coefficient, 0.24% per degree centigrade. So that's 24% per 100 degrees centigrade. So if you're on a roof and you're cooking at 100 degrees centigrade, your panels become 24% less efficient. That's bad, but it's half of what the P-type cell has. That's why that's there. The 50 pounds is there because OSHA won't let you use one person to install a panel unless you're under 50 pounds. And that's an ironclad rule. You don't screw around with OSHA. That glass is pretty thin already. There are layers. There are like 13 layers on this panel. These guys, REC, are really good. And they're world-class, one of the top two or three in the world. and they're world-class slash not Chinese, which is exactly what we need. And they work on getting low light to produce energy. So you get kilowatt hours in the morning and in the night. You really don't talk about when a salesman is trying to sell you solar, but you get kilowatt hours, quote, for free. The next one is degradation. Panels, as they cook in the sun over the years, degrade. These panels are exemplary. In 25 years, they still produce 92.5% of the energy they did when they were brand new. And that's almost double other kinds of panels. So if you combine low light every day and a degradation curve that's almost not there, you get high lifetime kilowatt hours. And this is what, if you look at the economics of a panel, that's all you get. You get a kilowatt hour for free from your panel or from the depreciation of the cost you paid for the panel, and you don't have to buy it from your utility. Currently in California, that's looking like 20 cents, and it's going up at a rapid rate. And right now, panels used to be flaky. They're now solid for 25 years, and even at 25 years, they're still almost brand new. So that's this one. Bifacial, think this panel, think the next generation of it, put glass on the front and back. You're not talking about glass that is the thickness of a match, a wooden match, and it's got to work, and it's got to work for 30 years, and we've already got our first samples of this one. And by the way, bifacial technology is what the utilities use. They don't even use the standard residential technology. The problem is if you take that thick glass and put it on a panel, you're looking at 70 or 80 pounds here. So these are panels that are put in place by robots in the field, by utilities, and they're not really available to residential. So the name of our game is how many watts, and now we're going to be over 500. Can you get from 50 pounds? That's really the game. Okay. Next is John Berg. John bought Cobalt Power Systems and is the CEO of it. He has worked for the Korean company Q-Cells, which is probably the only other major manufacturer, non-Chinese manufacturer, that is in the same class as REC. and he sells systems so he talks about those little advantages that were on the last slide that they're kind of hidden in amazing numbers so I've asked John to talk about he has he lives in Silicon Valley he thinks Silicon Valley we talk Silicon Valley not not sales and I got graphs that the first graph is knocks how many doors did you knock on we knock on 65,000 doors a week. So you got to talk about that to sell, but you got to talk about technology to sell and get a better ASP. So I'm going to let John talk about the technology of design and engineering he's brought to the company.
Thank you, TJ. What you're looking at here is the very first monolith installation. So this is on the historic Pleasure Point plunge pool. It was a club by Santa Cruz, right off the coast of Santa Cruz by Pleasure Point. The homeowner there, his name is Mike. He actually had a previous solar panel system specced. And when the monolith came out, I called him up and I said, hey, Mike, do you want to look at this new technology? It's called monolith. we can fit it on the best parts of your roof and maximize the kilowatts on your roof so that you have some space around it now it's a little bit more expensive but you're going to get a more levelized cost of energy the system's going to wake up earlier each morning it's going to turn off later on and go to sleep later on each night providing you more power every day so even though it's a little bit more upfront cost you're actually going to get more power over time and that results in about a 7 or 8 percent increase in ROI. Mike was like, well, what do they look like? And I said, well, they look sleek. They're all black. There's no white contact points or anything like that. That's why they call it the monolith. And he said, sure. And so we installed that and he's very happy. He sends me photo crops of his system production and it's meeting and exceeding what our forecasts were. What you're looking at here is the Santa Clara project. So this is the third project we've done for Santa Clara University. And you're looking at about a 1.2 megawatt installation that generates over 2.1 million kilowatt hours annually. And the estimated savings per year for the university is about $350,000. We did an integrated solar superstructure on the north parking garage and we did elevated carports here at levy parking lot and a rooftop array at the athletic excellence center it's these types of installations and these high quality premium modules that set some power apart and what we continue to look as a forward looking commercial outlook what we're going to be deploying to universities data centers other things across the country as we start to expand our market share.
Comment on the structure of carport. Okay, down here, you've got people parking their cars. This is in a university. Here, you've got a roof, which replaces a normal roof. It's not on the roof like residential. As you put panels on a roof that already exists, you got to make sure the roof is structural. You may have to do work to begin with before you put them on. In this case, the roof is panels all you have is a framework below it which is economical and what happens is the rays come down they get the panel in a thousand watts per square meter 20 percent of that goes into the panels and turns in electricity and doesn't go down and shine on asphalt heat your car up to 120 degrees fahrenheit and all this stuff so this this is a an important use of solar in large quantities.
So what you're looking at here, this is the waterfront building in San Francisco. You can see it's right there by the piers in downtown. This project demonstrates not only do we use high-efficiency modules, it's about a quarter megawatt, but we used about 554 high-efficiency solar modules for this project. One of the key engineering points is that this is a post-tension concrete roof construction and so we had to use lidar graphing and infrared readings to find the structural points for seismic installation and what you're looking at here is a floating floating array and i'll let tj talk about this a little bit but this is pre-bifacial monolith so if you look at what we're able to do when we get the monolith tube bifacial out? Will we actually be able to garner more wattage from the same rooftop, TJ?
Yeah, so these pads spread out the weight. The weight goes on a frame. This is not the standard way of doing it because this roof is not a new building and it's high-tech. And what that means is they stretch the rods and then they pour the concrete and let the concrete dry around the stretched rods. So it's tensile concrete. much stronger and then a different concrete it's much stronger so the this roof is way thinner ways way easier to support than a normal roof but problem you got is if you put too much pressure on a given area you can punch through that roof so this thing was built in order to float on these pads uh now the accident here is now you can visualize what a bifacial panel does if i have glass on the front side and glass on the back side and this is already painted a pretty good reflective white. I'll get light to go through here. I may put more area between another stripe to let in sunlight through the rows but typically this will take a 470 watt panel and the back side will take it up over 500 watts. This is monolith to what we're talking about.
Great and what you're looking at here this is one of 26 of the greener stores program this is in conjunction with our partnership with Sunpower or excuse me with Starbucks and we recently completed the Millennium project as well and these are essentially carport structures and they're built in the Palm Desert of California and you can see it gets a lot of energy and light from both the top and bottom. This is the Millennium Solar Project here and this is about 997 kilowatts so just under a megawatt of power and we recently completed this and it's a beautiful installation whereas before it was just an empty parking lot producing no power now produces power for the buildings around it and also provide shade for the cars underneath so it's a really good synergy there and actually uh surrender had uh spoke with uh and done an nps rating uh with the customer and i don't know surrender if you want to mention um the nps rating sure so nps basically is net promoter score which measures the customer's confidence and the trust with sun power and their
Speaker 3
uh you know their willingness to um you know uh allow us to be a reference point for future customers as well so they recommend us to other other customers as well so we have been working with this customer for almost a year now and the work has been done so beautifully the architecture the the engineering the procurement the entire energy performance over this side and then we spoke with we talked with their team the customer team with their president and about their you know their experience on sun power on five set of questions and they gave us a very good score the overall score was 90 which is one of the best best in class score so we are happy and the customer is extremely happy and they would like to do more business with us Thank you, Serenvir.
Yeah, at SunPower, as we continue to execute complex, high-value commercial projects that demonstrate our engineering capability and expertise, we're really driving premium quality to the marketplace and giving people a legitimate option to go with that. These milestones with the Millennium Project, Santa Clara University, the waterfront buildings in San Francisco, and most recently the Los Altos Golf and Country Club really demonstrate our ability to execute at a high level. our commercial pipeline continues to expand. We have next generation opportunities coming up, one of which is our first AI data center in Reno, Nevada that we're going to begin construction on next month. We're really, really excited about that.
And backed by heritage dated in 1985 here in Silicon Valley, SunPower remains committed to quality standards that exceed industry norms and premium technology solutions that position us for continued growth and a very strong commercial and residential outlook thank you okay um so this is what we've already shown you and why we're happy about the future so then what is the what does that turn in the numbers you can hold us accountable to um in this quarter we expect to grow revenue to 75 million or more and we expect to reduce our operating loss which was a can't use any other word than ugly 12.5 million to less than a million i was um tempted to say break even here and there is a possibility for that but i don't want to come back next quarter and be making excuses why we didn't make the numbers so those are the numbers i had a three-hour meeting yesterday with the executive staff, and we went over line by line and group by group. These are the numbers the executive team is committed to. Okay, to conclude, we've changed our company. We've cut millions of dollars. The state-of-the-art monolith and monolith two panels, as well as the high-tech, high-margin installations by our new homes cobalt division, we will move into the premium segment of the solar market divided by sustainable technology advantages and bring premium pricing to a very lean company. The company is lean, and it has to be lean because most of our sales now are consumer, and you compete on price. So what we need is a slice of our business where we compete on energy generation, efficiency, aesthetics, and architecture. And that's our strategy. So we've changed due to these quarters. We've changed significantly. A $13 million change in cost is non-trivial and the people back at home feel that. And this is our this has always been our plan. And we just want to tell you it hasn't changed due to a surprise in Q2 where panels we had the orders for put in the line didn't ship on time. They were late. And that hit us for revenue that looks like we just were screwed up, didn't have the orders or whatever. It's not really true. Okay, questions?
Thank you. We will now begin our Q&A session. As a reminder, for those who are joining via the web, you may submit a written question via the submission box located on the right-hand side of your screen. And for those joining our live Q&A, please click the raised hand located on the bottom of your screen. And when it's your turn, you will receive a message on your screen allowing you to speak. When you hear your name called, please accept, unmute your audio, and ask your question. Our first question today comes from Gus Richard from Northland. Go ahead, Gus.
Yes, thanks for taking the questions. Just in terms of, you know, execution in the third quarter, you know, there's air quality issues around the country, there's heat waves, there's a tight labor market. Do you anticipate or see any obstacles to getting jobs done in the coming quarter?
That's a great question. And I haven't got our operations people here to answer it. But yes, there's all kinds of headwinds in our industry, and that's why when we promised yesterday, we picked a number we thought we could make given those problems. So, yeah, there are, and the $75 million number, not a great number in my opinion, but it's what we thought we could do given the headwinds we're seeing in the market right now.
Okay, thanks. And then one for Tom, you know, welcome to SunPower. You know, in terms of, you know, FP&A and, you know, getting SEC filings out on time, you know, how much work do you see in front of you in order to get the finance organization, you know, running, you know, a tight ship?
Excuse me. Yeah. So I found the finance team is extremely hardworking. um we're also going through a process of uh re-implementing net suite and consolidating all of our uh statutory entities onto a single source so once we once we're able to get through that which will happen this quarter we will have better better systems we will have better processes and i expect uh much improved decision support all throughout the organization So the teams are working extremely hard right now. I'm also actively adding and enhancing the team by hiring, right? So we've been interviewing quite a lot over the last four weeks while I've been here, and we've already started to bring new talent onto the team.
Okay, that's it for me. Thanks so much.
Thank you. The next call that we have on the line is Derek Soderbergh from Cantor Fitzgerald. Go ahead, Derek.
Thanks for taking the questions.
So TJ, bookings are strong. I'm just wondering, is cash an inhibitor to delivering on that backlog and what sort of financing options do you guys have available to you at this point?
Wondering if you could maybe touch on that and if that's an inhibitor to getting you guys back to cash flow positive. uh first of all there are for real no excuses for no excuses for uh not chipping uh the typical excuse would be we have to have cash to buy the panels to put on the house and we've got a problem there we we're tight on cash you know i we had we ended the quarter four million dollars in cash The reason we had $4 million in cash is that despite working deals for a small infusion of cash, to tweak it up to the $10 million I've talked about, at the current price, I'm not interested in selling stock if I don't see money coming in and benefiting us by eliminating some sort of problem. And I don't. So we didn't do it. Therefore, I have to grovel a little bit on the $4 million. bucks are we tight on cash yes the tightest point was the beginning of this quarter we're through that right now if you looked at my cash flow graph and it's a i'm not compulsive about it but i do review it every day and it does have six lines on it that each have different meaning of cash and i and i review it so right now uh if i i'm i'm looking to raise perhaps five million dollars in cash to buffer us but right now our graph says we can make it clean through q3 furthermore the way we've arranged our milestones is that when you install you get paid and that payment we've now arranged comes the profit part of it comes to us or the gross margin and the cost part of it goes to our source of equipment so we we've gotten that prepay kind of problem and then by the way that's the industry we didn't invent that so we are looking forward to increase business equaling increased profit equaling better cash flow but we're tight uh just say that got it that's helpful and then just a little bit more detail on the 1100 jobs how many of those are funded today
And then could you sort of talk about what portion of those jobs needed sort of a redesign or repermit versus just kind of a more simple document fix? Can you provide a little bit more detail on that?
So the reason we had a breathtaking shortfall in revenue last quarter is the stuff was sitting in our line, not turned into revenue. The reason it wasn't turned into revenue is that we did not submit it for payment because our experience has been if you submit something with a small defect even, then it will hang up in their shop, and fixing something that's in their shop as opposed to something you're controlling that you get funding for if you submit it is a loser. So we didn't submit it. The 1,105 jobs in the FAB, we have, it's about half the normal inventory. You'll always have inventory in the line, but a double. And when you double the number of jobs in the line and you keep the same number of movements of activities per job per day constant, then the line moves twice as slowly, twice more slowly by a factor of two. And that's what happened to us. So we need to clean out the line, the constipation, and get back to a normal working inventory. It's a valid question to ask. Is the stuff in your line crap that is bound up multiple ways? I can describe a horror story. I've lived through two of them. I created one for myself back in Complete Solar. And what happens is your funding partner says, oh, we have to claw back. We paid you before you should have been paid. And then I inherited one from the old SunPower, which we're almost through now. So you don't want that claw back to happen. adjust your milestones, and then move forward without sucking up a lot of cash. You can get in trouble if your errors are significant. For example, I can describe this surreal horror story from Complete Solar Days. Job's in the line. It's been in the line for one year. It hasn't moved out. Well, it hasn't gotten a permit. It hasn't got the approval, city approval, nor does it have PTO, approval from the utility to turn it on. Why not? Well, the job itself was changed, and it doesn't match the permit. So now you have to go back and redo the permit. Maybe that was something simple, like the array has moved eight feet to the south to avoid some pipes or something like that. It doesn't matter. It's a permit. You've got to go to the AHJ. Now, if you go to California, you get a permit in a day. If you go to New Jersey, it's much longer. So then you've got the job hung up. You've got the customer screaming. You've got your net promoter score going to hell. Right now, most of the problems we have are minor problems that are fixable and important. The number one problem, and I review it, is J-Box. What's a J-Box? Well, J-Box is that little electrical box, and if you have a string of panels, it might be 10 panels. And if you have a two-string system, power from the two strings goes to a J-Box, and the J-Box, it looks like a box hanging in your garage, goes to the system. and you need to prove that the j-box is grounded which makes sense because you don't want a hot j-box on the roof okay nobody's going to argue with that well guess what if they didn't take the picture because you've got a guy who doesn't follow the spec then you don't have a picture or if he took the picture and he's kind of not a good picture taker then you have a blurry one And I had 11 of those as of a week ago where I wasn't getting money because nobody took a good picture of the J-Box. And I can go, there's a Pareto. And it is sort of a potpourri of ordinary execution errors. And we have specs. I participated in writing them. I signed some of them that prevented if you followed them. And we lost the discipline in one of our divisions of following the spec. And it's what put the pile on the line. we caught the pile in about a quarter, which is pretty fast, actually. And we will have it fixed by the end of the quarter. So it harmed us, this meaning, the share price, all of that, it's harmed us dramatically. But it's not fatal. And it is fixable. And it is quickly fixable.
Got it. Well, that's all for me. Really appreciate it.
Thank you. We have a number of questions in the queue. A good number of them are redundant. So So I'm going to cover a bunch of them with this one question, a two-part question. There's a lot of questions around the 2Q to 3Q revenue. The 3Q revenue, does that include the $15 million that could have been booked in 2Q? And therefore, should we be thinking about the rational run rate for 3Q as really $60 million? or is this, so is this a temporary uplift or should we think of your timeline as being moved out in further quarters so that you would reach 1 billion late in 2028?
That's a great question. So shorthand, if you're going to bonus 15 million bucks worth of revenue, that means the orders that you took in and shipped are 75 minus 15 is 60 million, is 60 million in your run rate. The answer is, yeah, our run rate right now is about $60 million. And there are bonusing events that occur all the time, but the model should be for analysts that you have a $60 million rate, and that will increase over time.
We have also a large number of questions about our commercial business, which is growing. is this something that you are focusing on short term and will this become a growing proportion of your offering going forward so let john answer that one yeah at cobalt power systems we've been in the commercial space for quite a while now with our integration with with sunpower we have a national footprint and so we can use our engineering and design resources to support SunPower's national installation partner network. So we're actually able to engineer and design commercial with a high quality and premium technology that SunPower is known for and deploy it through our established, certified, quality-minded installation partners so that we can go ahead and deliver for whether it be universities, data centers, or portfolio management. You know, we signed up several dozen storage units as part of a large portfolio. So that's what the synergy between cobalt power systems and our engineering base and our technology base here in Silicon Valley provides the nation at large through SunPower. And we're looking forward to expanding that commercial outlook.
So it's a real bright spot for us thank you um we have a number of questions around share count um are there any plans to potentially either issue debt to do share repurchases um or any thoughts about taking the company private given your share price today okay so multiple opportunities to screw up um share count if you go on to market watch or some site and you take the market declared market cap divided by the price that will give you the
shares that they use for the total shares for the company that number is the number that the transfer agent uses and that number is currently 151 yes 151 million shares and that's fully diluted for the shares that are counted in it and the question is have you done deals that will increase the share count in the future. And we, in effect, paid for a deal that happened a long time ago, three years, when we did a future sale, a forward sale to a group of three firms on Wall Street. And we just paid them off with 17 million shares, right? 17.9 million shares. So that 17.9 is not on the 151, and I could go through a list of deals that I'm aware of. I'll just tell you that the 151, when everything flushes through, when this is over time, will turn into 200. So that's where we are right now. Am I going to go private? No. own. I've worked all my career on public companies and taking startups as a venture capitalist like Enphase, for example, which is now worth $5 billion and making the companies worthy of being a valuable public company. That's why I'm here. Otherwise, I'll sit at home and patriot. So no, we're not going private and we're not going to leave behind. Of course, that means you have to maintain your share price at a buck. And that means that coming up in the future, there will be a reverse split to get our shares comfortably above a dollar. And right now, we're preliminary thinking. I got a board meeting this Friday. We will discuss it with the board and announce our intention on share count going forward. This is something that I'm on the board, but the board's the board and they've got to approve this legally. So I'll present what we want to do and we'll announce it after the board meeting.
Thank you. Two more here. The first one is about dedication to technology development work.
Do you have a team dedicated to working on things such as the monolith panels yeah the team is uh sitting right over here he's a quality guy he's he's the guy that enforced by the way the quality rules have prevented us although we were hell-bent for shipping some crap into the field last quarter he prevented it he also has worked on a bifacial panel startup in his fast because he's a silicon valley guy and if he's lucky this quarter he'll get one spoke he's bolstered by a guy named dick swanson who's a founder phd founder guy that i went to sanford with uh he's got that technical expertise so we can do the roadmaps okay and and that and so far we've been intelligent about having an R&D structure that is more than we could pay for and there I'll mention our friends at REC they did monolith one it's a multi-billion dollar company and they're working with us on the bifacial panel and this is what I would call a lightweight commercial bifacial panel they've already shipped product to us so it's in their interest to have hot products we're a publicly
traded company that that can brag about those products they've got so it's a win-win kind of deal so the answer is one and a half guys and then in the eight percent of my time i have left when i'm not doing what i'm doing now i work on it a little bit too thank you um and our last question to the for today is from a self-described retail investor who says i believe in your team but price appreciation has been brutal it seems that investors are calling your bluff on projections for future quarters what insights can you or thoughts can you share that would calm the market regarding your your plans or short short-term catalysts that we can know about before the next
Speaker 7
quarterly call the crannies give me the sideways look so he wants to talk about that so it starts with bookings um and bookings is everything right now as we mentioned before we've had three strong quarters in bookings as a matter of fact the transactional bookings the residential work is at an all-time record right now the team is essentially booking for q4 and their booking numbers are pretty robust going into q4 so in terms of comfort about the primary driver of revenue. It's bookings. Bookings was very good for the last nine months, ending last quarter in a near record with transactional bookings, and we are now booking for Q4, and that's looking pretty robust.
So, after bookings comes execution. Frankly, we haven't been very good at it. The execution miss that we just suffered led to dismissals, but I'll repeat my Washington comment to lead is to forfeit the excuses so in our company and i'm going to get tighter on this i haven't been as good as i should be i'm going to give a different job to people who can't make the numbers there's a solar industry doesn't have like semiconductors that i'm used to a visceral drive to make the number it is what it is your salesmen many of them are students they work during the summer, they go back to school, you have hot seasons, you have cold seasons, you can't control Donald Trump, blah, blah, blah. There's a thousand excuses. So I'm going to focus more on execution on the executive staff. And I've already started. We've already changed management in one of our divisions.
Thank you. That concludes our Q&A session. I'll turn it back over to Dr. Rogers for any closing remarks.
So on the credibility thing, I get it. And that's why I didn't say, trust me the big quarter is still coming I have given you numbers that I told you that I worked on three times over with the executive staff so they now know that it's not they do the best they can for our numbers it is our numbers that they are responsible for along with me and the answer is wait and see and I've given you numbers that I believe we can achieve certainly we're going to move north a lot. Even if we miss the numbers I gave you, we're going to move north a lot. We've had two atrocious quarters back to back and they're going to be behind us. That is one thing I do know.
Operator
That ends our session for today. You may now disconnect.
