SPWR

Hello. Welcome everyone to SunPower's second quarter earnings call. My name is Sioban Hickie , 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 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. Rodgers, SunPower's Chairman and CEO.

Morning. My name's T.J. Rodgers. 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 Kowalczuk, 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 Suntory, and he led a finance group there with $2 billion in annual revenue. He's got the experience in public and big company. This is his first shot at being a CFO of a public company. He's going to present the financials today. Tom?

Hi, good morning. Thank you, T.J. 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. 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 T.J. and the rest of the leadership team as we execute our strategy and work to create long-term value for shareholders.

This is the report we issued this morning. I've asked Tom to go through the financials with you. There is GAAP and non-GAAP. We focus on non-GAAP. That is how we have reported all of our quarters so far. Tom?

Yes. 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%. That is a direct result of our fall through on variable COGS and revenue. However, we did offset much of that through improved operating expenses, which is down about $19.7 million, of which 7.1 approximately is fixed 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 fall through because of the change in revenue as well as the improvement and cost cutting that we did during the quarter. Net net we are better than the previous quarter on operating income non-GAAP by about $400,000.

From my perspective, we need to explain a disaster revenue quarter today, and that will be my job today. The good news, if there is any, is that we had a huge drop in revenue but maintained, didn't change our profit. It went from bad to staying bad. That was because we have done structural cost cutting of 31-24, $7 million, and I will talk about future plans for structural cost cutting later as well. I took this shot at 7:17 A.M. this morning, my time, and the word is you didn't like it. I don't like it either. It is not good performance. If you look at the company, basically we are six quarters old and we have been at a buck and a half, plus or minus a half a buck forever. The last two quarters have been bad back to back.

That, of course, is bad and bad that we just talked about. That has impacted our share price. I am going to talk about why that happened, what we are going to do about it, in detail. Next is Dan McCranie. He is a board member. He has become active working in marketing and sales for us. He is a storied Silicon Valley figure. He has 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 has been a CEO, and his forte is marketing sales. Dan.

Thanks, T.J. What you're looking at here is total bookings for 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. 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 strong increase in bookings. This bookings increase is 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 revenued.

That's going to be the primary challenge for Q3, is getting these bookings revenued 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. 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 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, 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. 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. T.J.?

We're talking about a lot of bad news today, but I do want to point out that 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.

Great.

This is a picture of a headcount in the sales department.

In this one, this is our total 1099 sales organization broken out by SunPower, Sunrun, the acquisition we did back in September 2025, Ambia, the acquisition we did in October 2025, PureLight, 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. We've redeployed our 1,500 1099s to maximize bookings. That's what you're seeing right now. To a first order, we're about flat with our 1099s at a very robust 1,500, 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. When they went bankrupt, that sales force started attriting, 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. 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. 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 militia, the Virginia militia. He came back, and talked about the problem he had.

They burned his fort. They killed a lot of his people. He really lost. He signed a peace treaty that was written in French that he was misled by what it said. It was a bad contract, let me call it that. When he was making excuse to the governor of Virginia, who was his boss, as he was making excuses, the guy was waving his arms like this. Guy's name was Dinwoodie. He said the line of the movie I thought was great, "To lead is to forfeit the right to make excuses." That's where I am this morning. I can bitch about this or that, and this didn't happen, and that didn't happen. Of course, the rebuttal will be, "Well, great.

Why did you not fire the guy before he screwed stuff up? I want to make it clear right now I run the company. This is my problem. 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 PhD there. I'm a Moore's Law guy, Silicon guy. I worked 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. 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 in today's dollars. In 2020, after I left and retired, the company had sold for $10 billion. After that, I worked on the Enphase turnaround. Enphase is worth $5 billion today. 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. I'm looking at 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's zero. 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 Administration of the U.S. It talks by area of the U.S. and averages for the U.S. of solar penetration rates, meaning in 2024, only 5.6% of the houses in the U.S. that were qualified, rich enough, right area, right zip code, good laws in the state, meaning 95% of the homes did not have solar that could have had solar. This number's been updated recently. The 2026 update is 7%, up from 5.6%, so there's seven, therefore 93. There's a forecast by the same outfit, EIA, that it will be 30% in 2030.

I think that's a little bit aggressive, the point is, even in 2030, 70% of the market will be unsatisfied and will be wanting solar. 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 if you look at a four-year rolling average, forever. What that means is solar energy is number one, in addition to our portfolio of energy generation. Here I show gigawatts. Now, if you want to calibrate that, this is added solar additions. If you want to visualize a gigawatt, think about a nuclear plant, think about that giant dome, and there's usually two of them. Each of them are worth a gigawatt.

That's a cooling tower or a plant. 70 GW is a lot of power that was added, 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 on 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. This is also renewable. Bottom line, we're having a renewable transition. Like it or not, debate it, this is where the market is, and I frankly think it's right.

I think the fact that you can buy a solar panel for $100 and get 500 W of power out of it when the sun is shining is a big deal. 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, installing solar system, that'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. 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. 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. 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 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. 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 the lower volume, and the tax credit is gone. The double whammy is pretty much unemploying a lot of people. We've responded to that with $13 million in cost reductions. After Q1 2026, the first of the back-to-back bad quarters, we did a RIF, and 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. We went to a four-day week to keep the people, have the least 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 Cobalt, and we have two sets of managers, and we will rationalize that. That now reports to John Bergh, who's going to address you later. Are we fat? The answer is no, we're not. We never have been. This is a graph of our headcount. 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.

We have a lean company, and if you went into our place, you would see people working their butts off. Last weekend before last, 64 people worked overtime, which is efficient for the corporation. It's good for them, especially on a four-day work week. 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. I'd like to introduce Surinder Bedi. 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.

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.

Thank you, T.J.

By the way, 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.

Thank you, T.J. 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-W panel. It's got a unique technology in terms of hybrid technology, where we allow the N-type silicon wafer, and it is being sandwiched between the amorphous silicon. At the same time, it's got a very strong superior passivation. 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. The Monolith 470-W panel, through this JDA Technology partnership, where the two companies, REC and SunPower, with their innovation, have come together, and we have launched, during Q1, this particular product line.

It is being commercialized right now for residential, for light commercial, for various applications today, and our intention is to expand this business throughout this year. It's also got 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 squared. It's got the advantage of temperature coefficient. It has got the low light enhanced performance, both morning, evening, cloudy, and so on, with a low degradation, and huge warranty advantage as well. Putting this together, all the different technology advantages from a heterojunction technology, using the N-type cell, we got the most powerful 470-W 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 II 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. 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 another higher level to 494 to 528-W panel. It still remains the same lightweight 50 lb, very sleek panel, with a 2.0 m sq 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.

You can see, we have an objective to demonstrate the advantage on both the residential application as well as on the commercial side. By having a double-glass product, you have a much more reliable product because you don't have a plastic layer behind, which we call backside. 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-resistant side. The warranty is also improved from 25years-30 years, and we believe 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. This is the quick snapshot of what we have developed so far.

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 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 a superior efficiency. This temperature coefficient, 0.24% per degree Celsius. That's 24% per 100 degrees Celsius. If you're on a roof and you're cooking at 100 degrees Celsius, 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 lb is there because OSHA won't let you use one person to install a panel unless you're under 50 lb, and that's an ironclad rule. You don't screw around with OSHA.

That glass is pretty thin already. There are layers. There are 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/not Chinese, which is exactly what we need. They work on getting low light to produce energy, so you get kilowatt hours in the morning and the night. You really don't talk about when a salesman's trying to sell you solar, but you get kilowatt hours "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.

If you combine low light every day and a degradation curve that's almost not there, you get high lifetime kilowatt hours. 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 a utility. Currently in California, that's looking like $0.20, and it's going up at a rapid rate. 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. That's this one. Bifacial, think this panel, think the next generation of it. Put glass on the front and back.

You're now talking about glass that is the thickness of 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. 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. These are panels that are put in place by robots in the field, by utilities, and they're not really available to residential. 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 Bergh. 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. He sells systems, he talks about those little advantages that were on the last slide that are hidden in amazing numbers. I've asked John to talk about He lives in Silicon Valley, he thinks Silicon Valley, we talk Silicon Valley, 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. You got to talk about that to sell, you got to talk about technology to sell and get a better ASP. I'm going to let John talk about the technology of design and engineering he's brought to the company.

Thank you, T.J. What you're looking at here is the very first Monolith installation. 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. 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. It's a little bit more expensive, 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. 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% increase in ROI." Mike was like, "Well, what do they look like?" 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." He said, "Sure." We installed that, he's very happy. He sends me photo crops of his system production, it's meeting and exceeding what our forecasts were. What you're looking at here is the Santa Clara project.

This is the third project we've done for Santa Clara University, and you're looking at about a 1.2 MW installation that generates over 2.1 million kW hours annually. 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 Leavey 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 SunPower 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.

A comment on the structure of carport. 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 the panels. All you have is the framework below it, which is economical. What happens is the rays come down, they hit the panel, and 1,000 W.

Yep.

Per square meter, 20% of that goes into the panels and turns into electricity and doesn't go down and shine on asphalt, heat your car up to 120 degrees Fahrenheit and all this stuff. This is an important use of solar in large quantities.

What you're looking at here, this is the Waterfront Plaza in San Francisco. You could see it's right there by the piers in downtown. This project demonstrates not only do we use high-efficiency modules, it's about 1/4 MW, 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. We had to use LiDAR graphing and infrared readings to find the structural points for seismic installation. What you're looking at here is a floating array, and I'll let T.J. talk about this a little bit, but this is pre-bifacial Monolith. If you look at what we're able to do when we get the Monolith II bifacial out, we'll actually be able to garner more wattage from the same rooftop. T.J.?

Yeah. These pads spread out the weight. The weight goes on a frame. This is not the standard way of doing it. This roof is on a new building, and it's high tech. What that means is they stretch the rods, then they pour the concrete and let the concrete dry around the stretched rods. It's tensile concrete, much stronger, then a different concrete. Much stronger. This roof is way thinner, way easier to support than a normal roof. The problem you've got is if you put too much pressure on a given area, you can punch through that roof. This thing was built in order to float on these pads. 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. Typically, this will take a 470-W panel, and the backside will take it up over 500 W. This is Monolith II, what we were talking about.

Great. 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. We recently completed the Millennium project as well. These are essentially carport structures, and they're built in the Palm Desert of California. 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 kW, just under a megawatt of power. We recently completed this, and it's a beautiful installation. Whereas before it was just an empty parking lot producing no power, now it produces power for the buildings around it and also provides shade for the cars underneath. It's a really good synergy there.

Actually, Surinder had spoke with and done an NPS rating with the customer. I don't know, Surinder, if you want to mention the NPS rating.

NPS basically is net promoter score, which measures the customer's confidence and the trust with SunPower and their willingness to allow us to be a reference point for future customers as well. They recommend us to other customers as well. We have been working with this customer for almost one year now, the work has been done so beautifully, the architecture, the engineering, the procurement, the entire energy performance over this site. We talked with their team, the customer team, with their president, about their experience on SunPower on five set of questions, they gave us a very good score. The overall score was 90%, which is one of the best in class score. We are happy, the customer is extremely happy, they would like to do more business with us.

Thank you, Surinder. 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 excited about that.

Backed by a heritage dating to 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.

This is what we've already shown you and why we're happy about the future. What does that turn into numbers you can hold us accountable to? In this quarter, we expect to grow revenue to $75 million or more, we expect to reduce our operating loss, which was a, can't use any other word than ugly $12.5 million to less than $1 million. I was tempted to say breakeven here, there is possibility for that. I don't want to come back next quarter and be making excuses why we didn't make the numbers. Those are the numbers. I had a three-hour meeting yesterday with the executive staff, we went over line by line and group-by-group. These are the numbers the executive team is committed to. To conclude, we've changed our company. We've cut millions of dollars.

The state-of-the-art Monolith and Monolith II 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 defined 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. What we need is a slice of our business where we compete on energy generation, efficiency, aesthetics, and architecture. That's our strategy. 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.

This always been our plan, we just want to tell you it hasn't changed due to a surprise in Q2, where panels we had the orders for putting a line didn't ship on time. They were late, 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. For those joining our live Q&A, please click the raise hand located on the bottom of your screen, when it's your turn, you'll 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 execution in the third quarter, 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, I haven't got our operations people here to answer it. Yes, there's all kinds of headwinds in our industry, That's why when we promised yesterday, we picked a number we thought we could make given those problems. 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. Then one for Tom. Welcome to SunPower. In terms of FP&A and getting SEC filings out on time, how much work do you see in front of you in order to get the finance organization running a tight ship?

Excuse me. Yeah. I found the finance team is extremely hardworking. We're also going through a process of re-implementing NetSuite and consolidating all of our statutory entities onto a single source. Once we're able to get through that, which will happen this quarter, we will have better systems, we will have better processes, I expect much improved decision support all throughout the organization. The teams are working extremely hard right now. I'm also actively adding and enhancing the team by hiring. 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 Soderberg from Cantor Fitzgerald. Go ahead, Derek.

Yeah. Hey, everyone. Thanks for taking the questions. T.J., bookings are strong. I'm just wondering, is cash an inhibitor to delivering on that backlog? 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.

First of all, there are, for real, no excuses for not shipping. 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're tight on cash. We ended the quarter at $4 million 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. We didn't do it, therefore, I have to grovel a little bit on the $4 million. 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 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 review it. Right now, I'm looking to raise perhaps $5 million in cash to buffer us, 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. That payment, we've now arranged, the profit part of it comes to us, or the gross margin, and the cost part of it goes to our source of equipment. We've gotten that prepay kind of problem. By the way, that's the industry. We didn't invent that. We are looking forward to increased business equaling increased profit equaling better cash flow.

We're tight, just say that.

Got it. That's helpful. Just a little bit more detail on the 1,100 jobs. How many of those are funded today? Could you talk about what portion of those jobs needed a redesign or re-permit versus just a more simple document fix? Can you provide a little bit more detail on that?

Sure. 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, 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. 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.

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, the line moves twice as slowly, twice more slowly by a factor of two. That's what happened to us. We need to clean out the line, the constipation, to 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 Solaria, what happens is your funding partner says, "Oh, we have to claw back. We paid you before you should have been paid." I inherited one from the old SunPower, which we're almost through now. You don't want that clawback to happen.

Adjust your milestones. 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 is a real horror story from Complete Solaria days. Job's in the line, it's been in the line for one year. It hasn't moved out. Why? 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. Now you have to go back and redo the permit. Maybe that was something simple like the array has moved 8 ft to the south to avoid some pipes or something like that. Doesn't matter. It's a permit. You got to go to the AHJ.

If you go to California, you get a permit in a day. If you go to New Jersey, it's much longer. You've got the job hung up, you've got the customer screaming, you've got your store, your net promoter store going to hell. Right now, most of the problems we have are minor problems that are fixable in a quarter. 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, 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 box hanging in your garage, goes to the system. 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.

Nobody's going to argue with that. 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. If he took the picture and he's kind of not a good picture taker, then you have a blurry one. 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. I can go, there's a Pareto, it is sort of a potpourri of ordinary execution errors. We have specs. I participated in writing them. I signed some of them that prevent it if you follow them. We lost the discipline in one of our divisions of following the spec, and it's what put the pile in the line.

We caught the pile in about a quarter, which is pretty fast actually. We will have it fixed by the end of the quarter. It harmed us, this meeting, the share price, all of that, it's harmed us dramatically. It's not fatal and it is fixable, and it is quickly fixable.

Got it. 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, I'm going to cover a bunch of them with this one question or two-part question. There's a lot of questions around the Q2 to Q3 revenue. The Q3 revenue, does that include the $15 million that could have been booked in Q2? Therefore, should we be thinking about the rational run rate for Q3 as really $60 million? Or 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?

Great question. Shorthand, if you're going to bonus $15 million worth of revenue, that means the orders that you took in and shipped are 75 minus 15 is $60 million, and $60 million your run rate. The answer is yeah, our run rate right now is about $60 million. 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.

Thank you. 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?

I'll 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 SunPower, we have a national footprint and we can use our engineering and design resources to support SunPower's national installation partner network. We're actually able to engineer and design commercial with a high quality, and premium technology that SunPower's known for, and deploy it through our established, certified, quality-minded installation partners that we can go ahead and deliver for whether it be universities, data centers, or portfolio management. We signed up several dozen storage units as part of a large portfolio. 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. It's a real bright spot for us.

Thank you. We have a number of questions around share count. Are there any plans to potentially either issue debt to do share repurchases, or any thoughts about taking the company private given your share price today?

Multiple opportunities to screw up. Share count, if you go onto MarketWatch or some site and you take the declared market cap, divide it by the price, that will give you the shares that they used 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, That's fully diluted for the shares that are counted in it. The question is, have you done deals that will increase the share count in the future? 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, We just paid them off with 17 million shares, right? 17.9 million shares. That 17.9 is not on the 151, I could go through a list of deals that I'm aware of. I'll just tell you that the 151, when everything fleshes through, and this is over time, will turn into 200. That's where we are right now. Am I going to go private? No.

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, making the companies worthy of being a valuable public company. That's why I'm here. Otherwise, I'll sit at home and day trade. No, we're not going private, we're not going to leave behind. Of course, that means you have to maintain your share price at a buck, that means that coming up in the future, there will be a reverse split to get our shares comfortably above a dollar. 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, the board's the board, they've got to approve this legally.

I'll present what we want to do, 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 sitting right over here. He's the quality guy. He's the guy that enforced, by the way, the quality rules that 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 past because he's a Silicon Valley guy. If he's lucky this quarter, he'll get one spoke. He's bolstered by a guy named Dick Swanson, who's the founder, PhD founder, a guy that I went to Stanford with. He's got that technical expertise so we can do the roadmaps, okay? So far, we've been intelligent about having an R&D structure that is more than we could pay for. There I'll mention our friends at REC. They did Monolith one.

It's a multibillion-dollar company, and they're working with us on the bifacial panel. This is what I would call a lightweight commercial bifacial panel. They've already shipped product to us. It's in their interest to have hot products. We're a publicly traded company that can brag about those products they've got. It's a win-win kind of deal. The answer is one and a half guys, and then in the 8% 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. Our last question 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 or thoughts can you share that would calm the market regarding your plans or short-term catalysts that we can know about before the next quarterly call?

McCranie's giving me the sideways look. He wants to talk. Go ahead.

It starts with bookings. 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. Their booking numbers are pretty robust going into Q4. 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 at a near record with transactional bookings. We are now booking for Q4, and that's looking pretty robust.

After bookings comes execution. Frankly, we haven't been very good at it. The execution miss that we just suffered led to dismissals. I'll repeat my Washington comment. To lead is to forfeit the excuses. 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. The 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. There's 1,000 excuses. 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.

On the credibility thing, I get it, and that's why I didn't say, "Trust me, the big quarter's still coming." I have given you numbers that I told you that I worked on three times over with the executive staff. 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. 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.

Ends our session for today. You may now disconnect.

My name is Siobhan Hickie, SunPower's VP of IR. I would like to welcome everyone to the first quarter 2026 earnings call. I will review a few housekeeping items before turning the call over to our CEO, T.J. Rodgers. All lines have been placed on mute at this time. This call is being recorded, and a replay will be available within the events section of SunPower's 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. Also on today's call, we may discuss certain non-GAAP 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 be holding 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 hand 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. Rodgers, SunPower's Chairman and CEO.

Good morning. We've got the Q1 2026 results to show you this morning and answer questions. First, top lines, Q1 2026 revenue $72.8 million. That was down 9% from our guidance. Our latest guidance was $80 million, the market closed softer than we thought it would. Not catastrophic. 9% down quarter-over-quarter is not bad, it was weaker than we expected. This revenue alone would have impacted our Operating Income for $1.8 million. Our non-GAAP Operating Income was -$12.9 million, and that is a one-time event because we added $9.9 million in spending during the quarter. We had anticipated and still do anticipate a great Q3, and we started hiring 86 people last quarter.

Now we turned it around. We've gone from plus 86 to minus 115. Our cash was flat. You know, we raised $40 million, $41 million during the quarter. We used all of it to pay off debt, except to keep working cash at around $10 million. Since that time, this means since the beginning of May, we've cut our costs $9.9 million a quarter. That included RIF'd employees, 115. We went from 86 hires to 115 RIFs. We installed an across-the-board 4-day workweek through September. The theory on a 4-day weekend comes from my prior life in semiconductors. It's extremely difficult to build up a good workforce, and the last thing you wanna do in a yo-yo economy is lose your good people.

We did have a layoff. This was focused on overhead and redundancy among our 4 startups. In the sales and fulfillment area and the install area, we went to a 4-day workweek. What that means is, you work 4 days a week, you get paid for 4 days a week. Another way to look at that is a 25, or excuse me, a 20% pay cut. When you come out of it, you start working another day, the people you've got remain in place, and you have less of a arduous climb back. That was the theory on the 4-day work week. We've cut our inside sales group. We had a large call center.

We've cut it down to those needed to maintain our pipeline there, because I use the word paradoxically, call center sales have a lower profit margin and worse cash flow profile than our conventional sales force, which has now grown to 1,552 members, that represents 90% of our revenue. The inside sales group was using a lot of purchased leads from the market, and we wanted to get rid of that expense. We will continue this function, but at a reduced scale with the top producers. We reduced our finance admin costs, which had ballooned, not for any bad reason, but basically we went through an audit.

It was arduous, very arduous, and we just allowed anybody to be hired, either contract or employee that we needed without restriction. We brought that back down. You've seen this graph pretty much all the time. It's my proxy. It's actually the way I run the company. It's a metric I can understand and people can understand. We actually run it on dollars, but I report it on headcount. If you go back to pre-merger, there were 3,500 SunPower and Complete Solaria people. We picked 1,280 of them to start the company. Year ago, Q4 was our first quarter, we successively dropped that target over time. We have been in a period where the target's been 820, which is very lean.

We bounce up and down around 820 as we acquire companies who will bring in 100 people, from over 100 people from Ambia, for example, and then that pops us up, and then we work it back down with Synergy. Now just this quarter, we've dropped our target to 700. We think that's doable, and we're currently at 710. I wanted to talk about that before I went into the 2026 forecast. The cuts reduced our operating expense by $9.9 million a quarter. That's done. They were too late to make Q1 2026 better, hence the -$12 million loss. They will be in effect for 60% of the second quarter, and they will have a significant positive impact in the second quarter.

Our current Q2 2026 revenue estimate is $75 million. It's up $3 million from last quarter, still anemic, and the market is still anemic. We are starting with our acquisitions, starting to be able to bounce off the bottom. The operating loss will be reduced to $3 million based on the cuts that I talked about earlier. We're going to have a reasonable quarter, but a loss this quarter. Finally, an early forecast ahead more than 1 quarter. In Q3, we believe we're going to beat $96 million. I'll explain that in a little while. At $96 million in that quarter, we will be profitable and cash flow positive. We're going through a weak but mildly weak quarter on our way to a plan we've had all year.

That plan is shown here. This particular version of the plan is the one we used to raise money. We raised $41 million in the last quarter. Here you see revenue all the way through for 3 years. The guidance, meaning that's what I'm telling you and I'm planning on achieving and expect to be criticized if I don't meet it, guidance, and then out here is a model. Our $1 billion, our mission statement is to have $1 billion in revenue, and that run rate will be achieved in Q3 of 2028, so that's still on target. We're still talking about a big jump in revenue in 2026, and you can see that this is the non-trivial gap here.

As we've shown and put on the website, it is because our acquisitions, Ambia, Sunder, Cobalt, and the recovery of New Homes from the bankruptcy, they're all kicking in, and that's what we expect to give us a big jump in revenue in 2026. I put 2 more lines in here to show you where we are. We've done careful calculations. Our current break-even revenue, op inc break-even revenue, $76 million, and our current cash flow break-even revenue is $96 million. This $20 million extra, times the various yields going through the P&L is what's required to pay for the debt that we've got. We still are anticipating big growth in Q3. I'll let Dan McCranie's here.

He's running sales and marketing for us right now on a daily basis. I'll let him talk about that later. As a matter of fact, I'll let him talk about it now. Dan?

Thanks, T.J. Can I get the graph up, please? Thanks. This graph is total bookings beginning in Q4 2024, going on through Q1 of 2026. Just a brief word of what this definition of bookings is. This is just not a signed a home improvement contract from a customer. This is actually a signed contract plus a completion of the design plus funding approval. It's a robust, high-yielding bookings. That's what we use for our forecast methodology. You can see in Q4 2024 all the way through Q3 of 2025, the numbers were hovering around 1,500 to 2,500 jobs a quarter. You see a step function increase in Q4 2025. Remember, we acquired all three of our major acquisitions, Sunder, Ambia, and Cobalt, in Q4 of 2025.

Beginning in the second half of 2024, we started seeing the results of their bookings. You can see over 4,000 jobs were created in Q4 2025. In Q1 2026, we had a record of 4,446 jobs. Remember, there's about a 3-month lag between a booking and revenue in this particular industry. What we're booking for in Q2 now is, beginning now, is for the first stages of our Q3 revenue plan. T.J. showed you that we have a very robust Q3 numbers, a step function up, from about $75 million to $130 million. T.J. told you we're guaranteeing at least 96 and above that. We are currently on track in Q2 with the bookings we've got so far across all departments to meet that $130 million number.

We're happy with the way the bookings are going. It's predominantly the Sunder and Ambia turn on that's occurring, particularly in the springtime when the contracts get much larger compared to the winter. Going forward in Q2 2026, you're of course gonna have a record in bookings, and we think we're gonna have a record in bookings that allow us to do revenue in Q3 well in excess of T.J.'s $96 million.

Dan's used two words, guarantee and well in excess of $96 million. I can tell you right now that our lawyer in New York has just had a myocardial infarction, and he's laying on the floor. We'll call people to kind of recover him. I wanna make one other point here. These jobs, I don't deal with solar backlog is like oatmeal. It's just not firm. You can't tell where you're at. We have a definition the company means you have a signed contract, that is the guy signed up to begin with. You designed his home for him, and you showed him the contract, you showed him pictures and went again, and he signed up on that. You told him the funding was approved.

We've gone through our funders, and he was approved. Today, third-party ownership or TPO is the way people fund it, meaning, the funder is gonna pay for the house and then only installation, and his house will be part of a pseudo-utility later on for that funder. Funder. Okay. This is really good news. Normally, if I weren't talking about a $12 million loss, I'd be bragging about this and talking about big things in the future, and I still feel that way. Huh?

Bernard.

Bernard. What's wrong is what we changed. Boys, I worked till midnight last night on this thing. There are pages missing. I need to take about a two-minute break and bring out a memory stick here and load a computer with things I forgot, like our new CFO. Our new board member. I put it in my briefcase. I could tell you that I had planned this in advance, but that wouldn't be true. All right. Now I go to PowerPoint. Rise this thing. I'll give you the first page right now. Okay. That one I gave you. Nope. Convertible note offering, I talked about. Bookings are a record we talked about. We saw the detail. We filed our 10-K. It was a difficult audit.

I'm gonna talk about that audit and what happened. The audit required restatements, three restatements, three quarters of restatements, and they're gonna happen on time. That means within the next week. Here's the P&L. In Q4 2025, the last quarter, we did $90 million in revenue with $3 million in profit. Note 4 says we restated 10-Q results consistent with adjustments in the 2025 10-K. We've got a 10-K. That's God's word. That's filed. Everything is gonna be consistent with it starting today. I just wanted to point out that, and I will show you in a minute, that these numbers were what we reported before, and they were close to being right on, and I'll tell you why they weren't. Q1, $72 million, $12 million loss.

If you ask why the loss, it's right here. Operating expense going up dramatically for the reason I already said, we're getting ready for Q3. We're going to get ready for Q3, but we're going to get ready for Q3 in a shorter period of time. If I look at the 10-K audit, this is called prior quarterly results, so it's what I told you last year in meetings like this one. We were profitable in every quarter, minimally profitable in every quarter, and our non-GAAP op inc added up to $10.9 million on $308 million in revenue distributed like this throughout the quarter. After adjustments, post-10-K audit, the total op inc for the quarter dropped to $7.33 million.

Given the changes in the quarters, that was a pretty good result. The revenue for the company dropped to $300, and I'll explain that in a minute. There was one error there that caused that. If I look at the quarters, this is the first quarter of the new year after the acquisition, and in the 10-K audit, we uncovered a bunch of stuff and they had write-offs. They took our profit from $2.984 million, what I would call cash profit, down to a loss. There was a little bit of bleed over into Q2, and then Q3 became more profitable. In this case, this is non-GAAP profit, where we have put in actual cash gross margin.

The GAAP numbers have a different gross margin, which is lower than the actual cash collected based on some rules about acquisitions, where you're not allowed to acquire something and then have more than your average gross margin reported for it. In this case, our the actual cash gross margin was 80%, and that means we made more money according to GAAP than I reported. Okay. Old, new, and I'll just point out one thing. This is the new source of truth. When I talk about record profit in the future, it'll be because we're above 4.85, not above 3.5. When I talk about record revenue, it will be because we're above $91 million. This is history.

I wanted to show the comparison to show you that we played it straight for the entire year, and I wanted to. Actually, if you wanna ask which is the more believable scenario from a businessman's point of view, the answer is this one right here. This includes a lot of put this in that quarter, put that in that quarter. This is on your books, we've got to clean it up. We actually took the record quarter we ever had, and it got bigger. So it is what it is. This is the new source of truth. This is our base.

The good thing about it is for this amount of revenue and this amount of profit, I now have fully audited quarterly results where I will have in a few days when we submit the restated report, and we go forward with a clean set of books and a better accounting capability than we had. I want to talk about the audit for a minute. The standard auditing method is to sample line items from our books, and you have to sample because there are too many line items to actually look at every one. The auditors ask us to supply independent third-party documentation that validates the books. What does that mean?

For a given order, for example, revenue, they want the home improvement contract, they want the work orders that showed we sent people to their house, they want the drawings for the system that shows we designed it, they want the invoices for the panels that we bought and other things, so everything we bought to work on the house. They want the work logs, what crew went in what house when. They want the customer invoices. We billed them. Here's the bill. These are all hard proof points. They want proof of payment, they really did pay you. Then that means bank account showing money went into the bank as a cash flow kind of thing. Then they want proof of activation.

The system you built actually is running as we speak, and that involves typically getting a utility bill and showing them that there's been a change in the bill based on the solar. It is an arduous task, the audit, the 10-K audit, and there's only 1 audit a year that matters. It's 10-K, and that's the entire year. Then the quarters are unaudited till the end, and that's when you have the final statement. Okay. How big is all this? There are 9 steps in our solar installation process that lead to revenue. Our auditors required proof with hard third-party evidence on each of the 9 steps, on each of our 11,500 jobs in 2025. You multiply those numbers, you get over 100,000 line items. That means you have to sample.

In the sampling process, they go in, grab some, make you go through all of this stuff for it and prove it and document it. The sampling in this year required 309-- it led to 390 formal requests. 390 times our auditors said, "We need this," or, "We need that." By the way, I'm not making excuse here. Our accounting isn't where it ought to be. I'll tell you in a minute, the head accounting guy is now T.J. Rodgers. He's not used to this kind of accounting and will be better in the future. Like right now being the future. Our prior quarter reports that I just showed you showed well versus the 10-K, the truth, the source of truth for full year revenue.

The 10-K audited number for 2025 revenue was $300 million versus what we stated was $308 million. When we went back to find out what happened, the extra $8 million in revenue in the prior quarterly reports came from double booking a legacy company, Blue Raven, which doesn't exist anymore, from a defunct computing system, Albatross, which doesn't exist anymore. Somebody way back when, we're talking now probably Q4 of the prior year, booked jobs twice, and they came into our books, and we didn't start selling the things we acquired from SunPower until midyear, and then we didn't really start looking through what we inherited until the end of the year for the 10-K audit. Which by the way, I don't consider to be annoyance.

I consider it to be something that gives credibility to the company. That's why we're working hard on it. I'll show you what we've done. Okay, on the income side, Operating Income, I always use Operating Income rather than EBITDA, which I don't like. Our prior statement was $10.9 million. The new number was $7.3 million. The difference that was due primarily to pre-acquisition balance sheet assets, as I told you, using actual gross margin instead of a calculated gross margin. I'll show you this. I will show you. Nice having memorized this thing. These are the quarters that came from these quarters. This is the yearly total. It's really the only part of the 10-K.

These things exist only because of the requirement to do a restated 10-Q. These differences are big. Obviously, it went from a loss from profit to a loss in a quarter. That's when the auditors said, "We have to restate." We're doing that, and we've actually already done it. We already have agreement on the numbers. There's a filing coming up this week or early next week. Okay. Revenue did well. The extra revenue came from a double booking in an old system. The operating income, I showed a difference, but really the quarters being so different triggered the requirement to restate in Q1 2025 through Q3 2025. I stand for financial integrity.

I go, and this is an accounting term,, when I don't see numbers that are perfectly right and believable, and I've always been that way. I've been doing this stuff for 40 years. This is the first time I've ever had a restatement. All of a sudden, I had this horrible thought. When you lived in semiconductor nirvana, did you really never have a restatement, or did your finance guys who let you work on Moore's Law and transistors and they took care of finances, did your finance guys have a restatement here or there to that you didn't know about? When you're bragging about, "I've never had a restatement in my career," is it really true? I went on AI, "Is Cypress Semiconductor ever restate a quarter?" Let me start over here.

I did it 4 times. I've shown 2 of the 4. I changed the question because the answers changed, and I wanted to get a good look at it. Based on available search results, there is no direct indication that Cypress Semiconductor ever formally restated a quarterly report. The provided information shows during its time as an independent, publicly traded company, it warned of misses. The company often warned of upcoming quarterly shortfalls due to changing market, lowered guidance. They lowered earnings and revenue targets, such as September of 2004. They adjusted results. They reported GAAP versus non-GAAP results in 2016 and 2017 to account for acquisition-related costs. The search results do not contain reports of accounting errors, fraud, or formal financial restatements. I read this 1 second because it's got a little kudo for me in there.

It says, "The company, particularly under longtime CEO T.J. Rodgers, was known for a strong, no-nonsense approach to financial reporting." What has changed? I will not tolerate not having perfect finances, period. Period. No question, no debate, no meetings. We've changed. This first statement, we have received and accepted the resignation of CFO. I am not blaming this on our CFO. It's my fault, T.J. Rodgers' fault. That simple. I run the company, and if it's not perfect, it's my fault. We're changing CFOs. It's a mutual agreement to part ways and we've also agreed not to sling any mud at all in either direction. I have been appointed by the Board of Directors to SunPower's principal financial officer.

That's what you get called if you aren't really an accountant, but you run the finances for approximately 1 month. We're in the process of closing a new CFO, I'll be the principal financial officer for 1 month, I can guarantee you, I go to 2 meetings a day on finances. Although I'm not an accountant, I can read stuff and I can understand what's right and what's wrong based on all my experience. The board has appointed Bernard Gutmann, 8 years the CFO of the $42 billion chip company ON Semiconductor, to the board and to serve on our Audit Committee. We've made changes on our board to bolster our board. I want to introduce Bernard right now. He signed up last week, he was at his first board meeting last week.

Let me tell a story about Bernard. Are you showing his picture now? All right. You guys should be able to see Bernard now. I met Bernard. We're at Enovix right now. That's my free TV studio, so I don't have to do something at SunPower. Bernard is on the Enovix board, the battery company. I've noted, I sit right across from him in the board meetings, he's extraordinarily meticulous. Walks out, unlike me, he's got almost perfect handwriting, and he walks out with three pages of single line item notes every time. We've had zero problems at Enovix. I have now two validations, my old company and Enovix, that the ship can get run right and you shouldn't have things like restatements. It's just not okay. Okay. I know Bernard.

How do I know him? My SPAC invested in Enovix. We took them public. On my SPAC board was a guy named Manny Hernandez, who was my CFO. They created CFO heaven for me while I was running a chip company, and I got to work on Moore's Law, and he had no restatements for 30 years. He wanted to retire, truly, lot of grandkids, all that stuff. We said, "You can't do it." He said, "I've got a guy who's as good as me. Matter of fact, I trained him." I met Bernard Gutmann, and he was absolutely right. These are the two best CFO guys I've ever met.

With that little anecdote, I'd like to introduce Bernard, have him tell you a little bit about himself and what he saw at the first board meeting, if he's up for it. Bernard?

Thank you, T.J., for these kind words. I'm very excited to join the SunPower board. As T.J. mentioned, I had an opportunity last Friday to review and attend as an observer the board meeting and it was quite exciting. It is definitely with the issues that T.J. talked about from the finance point of view, a little bit of a challenge in the short run. I'm up for that challenge. It makes it even more exciting. I think we can set up the right processes and controls in place so that this doesn't reoccur. From the business point of view, again, I will be careful not to get the lawyers and other attack, what I saw was quite exciting.

With the successive amount of acquisitions that have been done, the pipeline seems to be quite exciting and Dan talked about it with the more than 4,000 bookings that are predicting some pretty good stuff to go in the future. Go beyond just the break-even, but into the moving towards the $1 billion opportunity that T.J. talked about. That by itself, business-wise, is quite exciting. Quickly from my background, I'm a industrial engineer by degree. However, I have worked more than close to 40 years, primarily in finance.

I worked at Motorola and ON Semiconductor in all kinds of roles, starting from the bottom as a financial analyst in a semiconductor factory in Guadalajara, Mexico, growing all the way up to becoming the CFO for the last 8 years of my career in this pretty heavy manufacturing environment to all kinds of activities, including debt financings, including audits, including operational stuff. My background is quite adept for helping TJ and the board in this upcoming challenge. I'm ready for it. Thank you, TJ.

I will give away one little secret. When Bernard Gutmann accepted, he said, "It's a really interesting company, but the pay sucks." Bernard Gutmann is like me. He's doing something that's interesting to him. What has changed? The SunPower team responsible for implementing Sarbanes-Oxley accounting procedures, if we had that in place right now, we wouldn't be talking about this topic. We've changed the line of command through the quality Vice President, Surinder Bedi, directly to the Chairman of our Audit Committee. The people who had been sucked into the hubbub of the audit working on SOX are going back to work on SOX only. The Chairman of our Audit Committee is Ron Pasek.

He's the only other former CFO on the board, and he and I were overwhelmed with when the audit came in with so many adjustments required. Both of us were quite surprised. I always brag about having eight former CEOs on the board. We have an extraordinarily good board. Right now I wish I had four CEOs and four CFOs, but we made a big step forward here. All SunPower responses to audit questions, so the 390, are now formal documents as opposed to telephone calls between us and the auditors. Formal documents that are pre-reviewed by the quality department, and they have a spec for when you respond to an auditor, what that response needs to contain.

If you don't follow it, they reject your response, and it doesn't go to the auditor. They understand they can't be slow, so they typically deliver an audited document, our own internal audit, 2 hours after the request. We never would have made it through the audit in time if we hadn't turned on this process, and it will That's the way we're gonna work forever. We bolstered our finance team. We needed to do more with people from operations and quality. I'm talking about 10-ish from either or both groups. The finance guys, and the reason I'm not casting aspersion on any of them, were getting questions that were beyond their scope. I mean, a very common result in solar is the guy owes you money.

You call him up, he doesn't answer. You call him up, he doesn't answer. You call him up, he doesn't answer. You find out he doesn't live there anymore. His financing expires, so you can't get the last payment. You have to get permission from the new owners to get in the house. If there's something wrong, you've got to work on it. All you have to do is have something like 500 to 1,000 jobs like that pile up, which they easily can over the period of a couple of years, and that is the quality poison that I see is more responsible for the malaise in the solar industry than anything else.

This way, we're putting together a team to respond to those questions and preempt them in the future, creating processes such that nothing happens that isn't pre-audited in our own company. Okay, I gave you this one and this one and this one. We've done our cuts. They'll be two-thirds effective this quarter. This quarter will still be weak but better than last quarter, and the losses will be contained a lot better. I validated again the model we used, and it's on our couple websites, and said we are going to make this jump. It's real. One of the reasons you've been hearing about Sunder for a while, I just make this one point. Sunder is a sales company.

Sunder manages 1,500 reps with 100 or so internal people, and their product is a signed contract, one of those contracts with all of the parts that I said earlier. They therefore have sold their product, and it's gone. There is no pipeline inside of Sunder, is really the point. When you buy them, you buy a machine that creates orders, and you don't start collecting orders in your own pipeline until after they're signed up, and that's why it's taken a while to fill up the pipeline. The same is true for New Homes, where we've gotten a lot of orders for New Homes, but that pipeline was dumped actually before we took over, took over the SunPower assets.

That pipeline was already dumped too because the builders, the corporations, they moved on, and they were gone, and we had to refill that pipeline. Then I pointed out, and you can write these numbers down and do incremental calculations on them, when we get profitable and when we get profitable and positive cash flow. Dan talked about the business. Now I'm ready for questions. I apologize for the mix-up. I'm sitting here thinking, "How could that possibly happen?" The answer is, we mail a few of my slides in a not the final slides. I worked on them last night. The email here, those slides we used to bring up the protection system and everything. They weren't intended to be the report, but that's what I ended up showing you. Apologies for that. Questions?

Thank you. Our first question today comes from Derek Soderberg at Cantor Fitzgerald. Derek, you may go ahead.

Yeah. Good morning, everyone. T.J., I appreciate all the detail you provided on the business here. I wanna start with the record bookings number. Specifically, what's the average revenue per job in the current mix, what's the assumed conversion timeline from booking to recognized revenue? I've got a follow-up.

You have it. Hey, Derek. The average selling price right now is about $32,000 per installation. Just as an aside, that's going up as more and more of the installations have battery attach. Battery attach is big, as you know, in California, where it's almost 100% battery attach, and we're getting very strong in California. About 45% in Texas. ASP is $32,000 and climbing through the year. Your next question involved, I think, the cycle time associated, the time between FTC or a hard order and revenue.

Yeah.

Was that the question?

Yeah.

It's the median right now on that is right around 2 months, 2-plus months. It ranges anywhere from a low of about 35 days to a high of about 115 days, depending upon the complexity of the roof install. We use as a general rule of thumb about 90 days. If you see our bookings pop in Q2, just track about 1 quarter forward and you should see the grand bulk of that revenue.

The corollary of that is, in the fourth quarter, when things start to slow down, you've got a bunch of bookings, and that 90 days worth of bookings jumps from Q3 to Q4. You hit January and we're still, promising to come out of the January, February, March malaise, and we can see it.

Got it. That's helpful. and then TJ, we're seeing some other solar companies, you know, over the past 6 months or so, specifically, you know, a big residential installer, you know, filing Chapter 11. Can you talk about that dynamic a bit, what you're seeing out there, and are you guys benefiting yet from survivorship? Thanks.

Benefiting from survivorship. We're seeing bankruptcies. The big surprise, and it's public, was Freedom Forever. They're bigger than us, they should be more robust than us in terms of hard times. We benefited from getting some of their salespeople. Not a lot. We've already acquired 3 other sales forces to bring us up to over 1,500. I don't wanna say the other area where we acquired because I don't want the other guys to know about that. We're not hiring right now, so when we hire 5 or 6 people in a key area, that means 5 or 6 people elsewhere, typically in an administrative function, go away because we got a 700-person limit in the company.

What's bad is you'd like to say we are benefiting from the malaise in the industry right now. What's bad is we had to lay off some people, not good. Screws up morale, gives you reset. Also, your sales force are 1099s, what that means is they run independent companies that you don't control. They don't work for you, they can disappear whenever they want, they often disappear anonymously, you find out later when nobody's answering the phone why. It creates unrest in the sales force, we're working on that right now 'cause a lot of our salespeople are new. They're coming in, "Man, I thought I escaped. SunPower's bragging about record this, record that.

I thought I escaped, now I'm watching. There were some minor things on the internet. Minor. SunPower stopped buying, what do you call them?

Leads.

Leads. Stopped buying leads. Yeah, right, 'cause the group that used them, we cut way back 'cause that group wasn't effective as our main sales force. SunPower stopped buying leads, and of course that's interpreted as imminent bankruptcy and it feeds the frenzy. solar industry is one of rumors, almost always unfounded. It's rare to hear the truth on the street in solar industry. So I hate that worse than I like the benefit of being able to pick and choose good people that we can wire down.

Picking and choosing has gotten us some top talent. That's why I think you're gonna see extremely strong Q2 bookings coming forward.

Got it. Super helpful. Thanks, guys.

Thank you, Derek. Our next question today comes from Gus Richard from Northland Capital Markets. Please go ahead.

Yes. Thanks for taking my questions. Just curious on the bookings in the quarter. I'm assuming those are all installs. How many of those were, you know, converted from Sunder Energy sales?

Make sure I understand your question, Gus. Are you asking how many of those bookings-

First question is, I guess first part is those bookings are installs, correct?

Correct. Yes.

Then of those installs, you know, some of them I'm assuming came from Sunder sales.

Correct.

I was just curious how many of the Sunder Energy sales got converted into installs?

Let me take it. Well, the answer is these are the ones being installed now. Sunder is difficult to say No, it's not. Actually, I prepared a slide. I'll show you the slide. Probably regret it later. There it is. Okay, this is our 1099 head count, number of salesmen. This is old SunPower. These guys sold loans, not TPOs, to people in the Midwest who wanted a 5-year loan to put on solar, and they're To me, it's pretty simple. The TPO pitch is actually more attractive to an individual. This group, it's essentially three-quarters of them have gone away. We picked up Sunder, this one you're talking about, and we still have 713 of the 900 people we had there.

We picked up Ambia, that's another 300, and we picked up a company we haven't talked about publicly because we just hired them, and that's Purelight. This is another company that had got in trouble. They've got an excellent sales force. Right now we've got a rejuvenated sales force that specializes in third-party ownership sales, and lucky we did. How many are Sundar? About half. Direct old Sundar, but Eric Nielsen, the head of Sundar, president of Sundar, and now our VP of Marketing and Sales, runs all these groups. They're now mixed together. They've been mixed together for 90 days. I only had this graph created so I could look at what we acquired and what it looks like. There's your answer.

Half Sunder, but all Sunder 'cause the guy that ran Sunder runs sales for us, except for New Homes, which has got a different sell to corporate customers, and it's a very small sales group that deals with that.

Got it. Then, obviously in the news is the war in Iran. New England, for example, uses LNG to produce energy, and it's better for the guys who sell LNG to sell in Europe, and their utility prices are gonna go up as they are in a lot of places. You know, sort of how much has the change in the energy landscape, if you will, starting to incentivize consumers?

That's the biggest driving force. I mean, you asked all the questions that I put down in the appendix to save time. This is solar energy additions to the grid, so now talking about utility scale solar. There's no oil of any kind up here. We have only natural gas is being added today. First it says, "Here's solar," it says solar didn't matter enough even to be a blip on the graph until 2011. If you look at the growth of solar, it's been spectacular. Here's a bad year. Here's another bad year that lasted for 3 years before it recovered, so solar is not immune to dislocations. Battery is the second one.

Battery, if you really think about it, there's batteries in the grid where they take some power source and store it in the battery. There's also batteries on 1 million houses in the United States. They're the best kind of battery 'cause they keep that. What they do is they don't add power to the grid. What they do is they reduce the power that house requires. They store the daytime sunlight energy, let the customer use it at night to avoid the high, high-priced natural gas, the kilowatt-hour fees. Right now, if you wanted to talk about is this market good, market's great. If you wanted to talk about what does it mean when the price of utilities go up, that's great because our prices are going down, not up.

There may be a glitch due to something in the supply chain. Our prices are going down every year and have been. This whole rise here in solar is because we've become truly economically competitive. I don't run around talking green this, green that. I run around talking about, "You pay me so much a month, and your bill will go down by more than that per month for the rest of your life. What do you think?" Okay, then, let me see. By the way, I won't discuss it. This is Q1 2026 revenue. First plan, this is a positive event we wanted, our second plan, our third plan, then actuals.

I only look at this every day, and I got nervous right about there when this second plan got created there. We had drifted off just a few percent, and we started reacting right there. If we hadn't done that, we wouldn't be in the shape we are in right now to react to this crisis. Let me leave it there. If somebody asks me another question, I would love to show you that graph, but I'd rather take questions. Go ahead. I'm set. Thanks.

Thank you, Gus. We have a couple questions coming in from the web. The first one is, "With the increased bookings that you've discussed, what is SunPower doing to ramp up installs to meet this incremental demand?

Yeah, that's a great question. Well, we were in the process of hiring 86 people for our install organization to handle all that business. I came in one day and, you know, I'm the hotshot from Silicon Valley, and I said, "Wait a minute, don't hire 86 people, lay off 115 people." The market has whipped us around and the four-day workweek I discussed was designed to allow the company flexibility. The reason my graph revenue shows $130 million in Q3, and I've only guided to $96 million, 'cause that's cash flow positive and that's sort of a minimum step we have to take, is that we still have to do the ramp.

Actually I was driving over here today, I was thinking about next guy I'm going to call is Spencer Jensen, he runs our ops, and I'm going to tell Spencer he needs to take his new employee training time from his current 4 weeks, where I pay salary for 4 weeks and don't get anything, to like 1 week. We do that in sales, in our sales division, and we need to get faster. We need to be able to react faster, because I'm not going to buy it up front and spend money now on that increase that's coming later.

Thank you. We have a question, T.J., to you. Last year in July you spoke about, potentially, you know, looking to wind down and exit as our CEO in about a year, which is coming up. The question is, would Dr. Rodgers like to revise that timeline and reinsure investors of his continued attention and leadership within SunPower?

Well, one thing I kinda like is that I was retired. I was on 6 boards, so I wasn't exactly doing nothing, but I was retired for 6 months. Now I'm enjoying being back in the full war mode. That's 1. 2, I would never leave a mess behind and have them say, "Rodgers, you know, screwed it up and then took off." That won't happen. The aren't gonna win, we're gonna win, and I'm gonna be there as long as it takes.

Thank you. We have looks like one final question regarding battery attachments. "What effect do they have on the overall profit margin of your sales?

Batteries are more profitable at solar. Best job is called a grid-tied battery. That's where you don't even back up the house. You think, "Well, why would you buy a battery and not back up your house?" The answer is you buy a battery to collect cheap, free energy at noon, and then dump it into your system at night if you live in San Diego and they want $0.40 a kilowatt hour for it. A grid-tied battery is one thing hanging on your garage wall and then one hookup. It's very you can do two of them a day. Batteries are sort of an afterburner for us because to that $32,000, add another $10,000 for a battery, that's $42,000.

Thank you very much. That concludes our call for today. Dr. Rodgers, do you have any final closing remarks?

Well, yeah. I'm embarrassed by that. It is the last event that basically is tied to the string of misfortune we've had surrounding the 10-K. I frankly would like to thank our auditors for. You realize they bulked up from 10 to 17 people just to do I created the memo machine and started machine-gunning them with answers. They bulked up from 10 to 17 people and stayed with us until we tied it up. Now I'm gonna have three perfect quarters restated by next week and I've got the year of the 10-K done. Going forward I now know, as you've seen today, the details of how that happened and it's an interesting problem to manage that.

I've started to realize the reason there are so few install companies that are public is being solar, and the vagaries of having your stuff spread all over the U.S., as opposed to in a nice controlled factory. Being solar, the accounting for a public company are not incompatible, but it's difficult. One of the things I'm going to do is make our accounting a weapon that's cheap, efficient, and accurate so we can focus on the other things. I didn't talk today about our new products, I didn't talk about our new bifacial panel we just put in the boardroom to show the board last week, so that our people can focus on that, not on the error.

Thank you very much. That concludes our call. You may now disconnect.