Here we go again.
SunPower has gone through numerous restructuring periods over the course of its history, most recently in 2009, 2011, 2012 and 2014, and now twice in 2016.
After announcing layoffs and lowering revenue guidance in August, SunPower is being forced to make even bigger changes due to pressures in the upstream solar market.
This morning, the company said it will shut down its 700-megawatt Fab 2 in the Philippines, shed up to 2,500 workers and cut capital spend by 50 percent. The goal is to generate $300 million in cash by the end of 2017.
The 2,500 layoffs come in addition to the 1,200 layoffs announced in August.
Module oversupply, mostly due to rapid production increases in China, is yet again hurting the high-efficiency solar manufacturer (and everyone else). According to GTM Research's PV Pulse, multicrystalline module Q3 spot prices were at $0.45/W (-12 percent change quarter-over-quarter, and -16 percent year-over-year); and estimated global blended module pricing is $0.42/W (-26 percent change Y/Y).
"We do not expect price reductions to continue at this pace, but we do believe that the panel price environment will remain very challenging into 2017," said CEO Tom Werner on an investor call this morning.
Some Chinese producers are reportedly selling modules for less than 35 cents per watt.
SunPower's stock price is down more than 75 percent this year. In early trading, shares moved upward after the restructuring plan was announced.
Werner said the company is "prepared for the long haul." He said the market downturn could last a year or more, but hoped the situation would turn around in the second half of 2017 as more producers take capacity offline. Since manufacturers tend to shut down production quietly, Werner said the exact timing could be "hard to project."
The company issued a restructuring plan with the following changes:
- Rationalize capacity to balance production with near-term profitable demand through the closure of its ~700-megawatt (MW) nameplate capacity Fab 2 facility
- Implement a global workforce reduction of approximately 25 percent or 2,500 employees
- Reduce 2017 annual operating expenses to less than $350 million
- Substantially decrease 2016 inventory to improve working capital and de-lever its balance sheet
- Reduce annual 2017 capital expenditure by more than 50 percent to approximately $100 million
- Continue to invest in next-generation cell and module technology as well as complete solutions
- As a result of these initiatives, the company expects to incur total restructuring charges of $225 million to $275 million through the end of 2017 of which approximately 30 percent will be in cash.
SunPower expects GAAP revenues of between $1.8 billion and $2.3 billion in 2017. The company expects to turn the corner in 2018, and hit "bottom-line growth" that year, said CFO Chuck Boynton on the investor call.
On the downstream project side, Werner said the company will invest equally in distributed generation and large-scale solar power plants in 2017, with a greater emphasis on distributed projects in 2018.
He also expects no changes to 8point3 Energy Partners, the company's YieldCo partnership with First Solar. "We're really happy with our ownership in 8point3," he said.