Q1 2022 SunPower Corp Earnings Call
Ladies and gentlemen, this is your operator your conference will begin momentarily. Please continue to standby.
Once again this is your operator your conference will begin momentarily. Please continue to standby.
[music].
Good afternoon, welcome to Sunpower Corporation's first quarter 2022 earnings call.
This time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Ask a question. During this session you will need to press star one and you can tell us that if you require any further assistance. Please press star zero.
I would now like to turn the call over to Mr. Mike Weinstein, Vice President of Investor Relations at Power Corporation. Thank you Sir you may begin.
Thank you good afternoon, I would like to welcome everyone to our first quarter 2022 earnings conference call on the call today, we will begin with comments from Peter Pharisee CEO of Sunpower, who will provide an update with first quarter.
<unk> and business highlights followed by our expectations for the remainder of 2022.
Following Peter's comments Morrissey L. Sunpower CFO will then review our financial results and guidance for the year.
As a reminder, a replay of the call will be available later today on the Investor Relations page of our website.
Now during today's call we will make forward looking statements that are subject to various risks.
And uncertainties that are described in the safe Harbor slide of today's presentation. Today's press release, our 2021 10-K, and our quarterly reports on Form 10-Q.
Please see those documents for additional information regarding those factors that may affect these forward looking statements also we will reference certain non-GAAP metrics. During today's call. Please refer to the appendix of our presentation as well as today's earnings press release for the appropriate GAAP to non-GAAP reconciliation.
To enhance this call we have posted a set of Powerpoint slides, which we will reference during the call in the events and presentations page of our Investor Relations website.
Same location, we have also posted a supplemental data sheet detailing additional historical metrics.
With that I'd like to turn the call over to Peter Pharisee CEO of Sunpower Peter.
Thanks, Mike and good afternoon, everyone.
It was terrific to get the opportunity to meet most of you last month in person at our analyst day.
You will recall, we presented our five pillar strategy, but we are using to build sunpower into the worlds best renewable energy company.
Our full attention is now on the execution of that plan.
Today, we will highlight the results we have achieved in the first quarter toward our goals and how we plan to continue working to deliver our full year 2022 guidance.
Let's discuss some of our Q1 business highlights on slide four.
I'm pleased to report that customer demand continues to be very strong and we have added 16500, new customers in the quarter, a 40% increase year over year and nearly even sequentially with the new customer count from the seasonally strong Q4.
Importantly, we also continued to see strong growth across all of our sales channels with 83, new dealers added at 118% year over year growth from the Sunpower direct channel.
Again this quarter, we set a new backlog record at 13800 customers.
We also set another record this quarter with over 70000, new homes customers in the pipeline.
Our growing multifamily segment.
Our sunbelt energy storage system continues to benefit from strong customer interest with a 24% sunpower direct bookings attach rate.
And some power financial continues to make progress with a 41% bookings attach rate in the quarter on its way towards achieving our stated goal of a 45% attach rate on recognized customers by year end.
Please turn to slide number five.
As we announced at Analyst day, our discussions continue with first solar to develop the highest efficiency tandem thin film in polysilicon modules over the next 18 to 24 months.
This product, we keep sunpower in the forefront of residential solar technology as we move to diversify our supply chain and provide customers with the highest efficiency panels in the industry.
Please turn to slide number six.
We recently launched our dealer accelerated program to provide new growth.
Territorial expansion opportunities to our dealer network.
Many of our dealers have the desire to grow their businesses, but are capital constrained.
Sunpower is the only company to address this need by making investments in our highest performing dealers.
In Q1, we reached a new agreement with empower solar in New York City, and long Island, and we continue to see strong interest in the program across our dealer channel.
This program is an important component of our plan to grow our market share over the next few years and we look forward to providing you with further updates please.
Please turn to slide number seven.
Our growing list of new homebuilder partnerships is an important part of our growth plan and we are proud to announce our newest exclusive agreement with land sea homes.
All homes built by a landscape in California will include a sunpower system and buyers in Arizona, Florida, and Texas will have the option to add a system as well.
Increasingly we are seeing the homebuilder industry.
To emphasize its an environmental and ESG focus with a commitment to rooftop solar and we are proud to be a partner of that effort.
With land C. We now have national agreements.
For solar in states outside of California in place with five of the top 20 U S. Homebuilders and we continue to work on adding more.
Please turn to slide number eight.
Let me share with you some of the progress we have made executing against the five pillars of our strategy.
For customer experience, we have already made significant progress in Q1.
Our net promoter score improved from 35 to 49 up 32% improvement year over year.
Phone and chat service levels also improved reducing customer wait times, 48%.
So less than a minute when customers contact us by phone.
We focused on these and other important measures to ensure that Sunpower continues to earn the title of the best customer experience in the business.
Our new products. In addition to our late stage discussions with first solar we recently announced our expanded Sun vault whole home backup offerings at 26, and 52 kilowatt hour options with an industry, leading 10 year warranty.
Under growth, we now cover 71% of the U S geography, with the addition of new dealers and additional investments to expand our business.
Our mobile my Sunpower App and website are both receiving new intention for rapid improvement.
This has resulted in measurable progress on our customer ratings we.
We are just getting started here and have plans to expand the functionality and usefulness of our customer and installer facing applications and look forward to delivering more updates throughout the year.
And finally Sunpower financial continues to grow quickly with over 8500 customer finance attachment bookings in Q1, and 86% increase versus last year.
Power financial has already added over $2 billion of third party capital for new multiyear loans and leases this year.
Before I turn it over to Martin, who I'd like to comment in.
Two of the hot topics right now, which is rising supply chain pricing.
<unk> about panel supply.
Rising supply chain prices I think it's important to start to remind everyone that sunpower did not raise prices for our dealers and for our customers in 2021.
Therefore, we are in the unique position of being able to pass fully pass along our supply chain cost increases this year in 2022 when.
When you combine these increases with the fact that consumers are seeing increases in the utility bills. It is clear that residential solar is still a great value.
And the strong customer demand for our products reflects this.
Regarding panel supply panel supply has become more challenging with the recent department of Commerce anti circumvention investigation.
It is important to note that our current main panel supplier has not been named in that investigation.
But even with the challenge this brings we've been able to place additional.
Fair enough panels to meet our customer demand and meet the guidance goals, we laid out for you at analyst day.
Now I'll turn the call over to modern <unk> CFO of Sunpower to share our detailed results for the quarter.
Thank you Peter Please turn to slide 10, as Peter mentioned earlier strong demand is the key story could sunpower in the first quarter and this combined with continued healthy gross margin.
And platform investment to boost execution.
Well for a strong second half of the year.
First quarter, we reported $11 million of adjusted EBITDA and $336 million of non-GAAP residential revenue.
We added 16500, new customers in the first quarter, a 40% increase year over year that flowed for almost 72% increase in gross lead appointments, putting us on track to achieve our guidance of 73000 to 80000 customers by year end.
Residential gross margin of 22% remained in line with Q1 results last year, Although we continue to note the impact of higher freight.
Freight and labor costs that are in <unk>.
Backing that results and the industry broadly.
Combined with more spending on sales and marketing this quarter. These factors resulted in a sequential reduction.
Adjusted EBITDA per customer for platform investment $700 for the quarter.
As we highlighted at the analyst day platform investment of $18 million is primarily product digital and corporate Opex and in line with our 2000.
2022 guidance for $17 million.
We expect to get operating leverage as we scale, our customer base faster than spending through the remainder will be.
Finally, our balance sheet continues to remain strong and provides us with the flexibility to invest in the business. Please turn to slide 11.
Affirming our guidance for 2022, and a target model 25 that we most recently discussed at the analyst day.
As Peter and I have illustrated today strong customer growth and backlog will add to operating leverage in the coming quarters.
Next I want to walk you through some of the expected improvement to adjusted EBITDA per customer that we expect to see as we build up to our guidance for $90 million to $110 million of adjusted EBITDA for 2022.
Please turn to slide 12.
On this slide we are highlighting factors that lead to our 2022 full year guidance for $2000 to $2500 EBITDA per customer before platform investment starting from a base of $700 in the first quarter.
<unk>.
We expect to see improvement in gross margin largely in the second half of the year from higher customer pricing to offset cost inflation that will result in a net incremental improvement of $125 $325 EBITDA per customer for the full year metric.
As Peter mentioned, we are in a strong position for this especially since we did not raise prices in 2021.
Second.
Recall that our target models on the analyst day also assumes sunpower financial attach rates grow from 35% to 45% by the end of 2022.
The target model also assumes a storage attach rates, but installed system that goes through 2022.
Assuming up to a $1000 to $3000 of incremental margin with each attached customer.
Ultimately expect a broad incremental improvement of $125 to $225 EBITDA per customer for the full year.
We expect improvement to come from keeping sales and marketing spending relatively steady across the remainder of the year, allowing it to decline on a per customer basis, but $50 to $150 EBITDA for the full year.
Together that nets out to an improvement of roughly $300 to $700 EBITDA per customer for the full year metric bridging the gap between the $7500. We are reporting for the first quarter and our annual guidance of $2000 to $2400 for grading 'twenty two.
As a result, you should think about our results are seasonally weighted towards the latter half of the year as higher pricing takes effect and we see the benefits of higher sales and gross margins relative to investments.
Please turn to slide 13.
Before we head into Q&A I want to tell you a bit more about the new residential lease and PPA fund that we closed this quarter.
Which would support demand and enable more of our customers to afford and achieve electric bill savings as in the past some strong will use the funds to pay sunpower and upfront payment that we recognized as revenue. However, I am pleased to report that for the first time Sunpower will also be receiving 50.
Plus percent of Samsung Z, meaning equity cash flows for the fund after debt service. In addition to the upfront cash payment.
Furthermore, with a lower cost of capital. We have also recalculated, an estimated value of Sunpower shed of Samsung's lease renewal next weekend value $280 million with that I would like to put on the call over for questions.
Thank you Sir we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad again at Star followed by the number one on your telephone keypad. Please standby, while we compile the Q&A roster.
Your first question is from Sean Morgan with Evercore. Please go ahead.
Thanks, guys.
Peter I was I was interested to see when you guys made the announcement on the first solar collaboration so.
Typically think of thin film on residential roof. So I was kind of wondering what are some of the challenges.
Using thin films as opposed to kind of crystal lines.
And the cost mostly toxicity, what sort of things do you have to achieve.
To start integrating that into your systems.
Yes.
Thanks, Sean.
Just to start off by just saying a quick apology to everybody I'm a little under the weather. So my voice is this is like my radio voice stop My my normal earnings call voice, but.
On the partnership potential partnership with first solar I think we are quite excited for a number of reasons and I think the first reason for excitement is at this tandem product that we want to build together will really be the first of its kind and because it will allow light to both be picked up by silicon cells.
And by thin films, it's really unique and quite innovative and we think will lead to great great efficiencies.
Big difference in thin film is that also allows you to make a panel.
Very efficiently from a manufacturing standpoint, and also the aesthetics, which do matter to consumers.
It looks like a flat screen panel as many of you saw at our analyst day flat screen TV I should say so.
It's a technology that's proven itself out in the field that utility scale and then combined with silicon cells. We really believe has the potential to be a great innovator in the residential business.
Most of the panels that first solar has made today are of larger size.
Residential panels, so probably one of the biggest areas of innovation will be focused on with them is how do we now produce the same panels and residential size and how do we think about what we can do to innovate on the installation experience side. All of that is exciting information I would say stay tuned, but we'd love to talk to you more about that once we.
You get the buildup.
Wow, Okay, and this one might be more for money, but I was curious because we haven't had a rising rate environment for many years. Now. So you guys are starting to lean into diversifying away from from cash purchases or are you seeing any impact.
To like customer preferences in terms of PPA leases.
And loans as rates rise or is that something you anticipate.
Go ahead Mike.
Okay. So look we evolve.
It's been about the customer choice and we are not seeing any major changes in preferences, although I would note that our sunpower financial attach rates.
Increasing like we said at the analyst day AD bookings that actually accounted for 41% and then within.
The three instruments of cash loan and lease we are seeing significant growth in all three but but loan is leading the pack.
And then as you recall as it relates to the interest rate comment.
We've just announced.
Most to $2 billion of new financing, including the new debt auto lease fund.
Lower is that all in cost of capital to less than five clinical 5%.
Okay, so not like a really noticeable headwind thanks, a lot motto and Peter.
Thanks, Sean.
Your next question is from Ben <unk> with Baird. Please go ahead.
Hey, guys.
Okay.
Mentioned.
Reprice or raise rates.
I just want to understand how that flows through or how much of your customer base you can do that with.
My first question.
Yeah, So Ben the way we've thought about it as we as we made a point on our opening remarks, we really feel like we're in this unique position because we did not raise prices in 'twenty, one and so there is an opportunity I think in this environment for us to do that without hurting the real value that consumers get.
So we've been able to raise prices both for panels and for our storage products and as you saw from our demand and our comments on demand.
Demand is actually accelerated at the same time, we have been raising prices. So I don't think those two things will normally go together in the long term, but I think in the short term, we feel pretty comfortable being able to pass along all of our supply chain cost increases in the form of higher prices.
And.
Even into early Q2, I will tell you demand continues to accelerate so we feel very good about the demand side of things.
And on your customer count.
It looks like.
<unk>, new ads, except for last quarter, how much do you think is the environment.
How much is.
Your offerings.
How much is through new strategies.
Yeah.
I believe it or not I don't think a lot of it is the new strategy because we're just making these investments. So we're just getting going so in my mind I think some of the new strategic areas have the potential to add to it but I think the fundamental issue that's going on right now Ben is the fact that consumers can save money and when you read about utility price.
This is going up 15% year over year, and I think it's hitting everybody hard in the pocket book and there are so many Americans live paycheck to paycheck.
Think solar has been very valuable, but now I think it's even a bigger spotlight on the fact that this is not only something thats going to help us save the planet, but it's actually going to help save you a lot of money and I think thats. The strong interest that we're seeing across the board and the interesting thing to me is we're seeing.
Strong demand across all of our sales channels, we happened to give some information about our direct sales channel, but I will tell you that are installing dear dealer channel, our blue Raymond channel New homes.
We're in very strong position from a demand standpoint across the board and then we're also seeing a lot of geographic diversity. So we're seeing strong demand in Texas, Florida, and the northeast and so this is not just a California solar business anymore, It's really a strong healthy business across the entire U S.
Okay, and if I can just sneak one in.
Coming off your dealer.
Before analyst day.
The accelerated program.
Joey.
A new dealers.
You just talked about your kind of reception.
Where that stands versus.
Just.
Few months ago was.
Kind of a feedback from all of that.
Youre thinking about it thank you.
Yeah. Thanks, Ben I was quite excited for this dealer conference. This is my first as CEO and it was really the first time, we've gotten to be in person with our our dealers and the first time they've met quite a few of the new folks to the management team and the feedback we got during the meeting and afterwards has just been.
Very very positive I think the dealers are very aligned with the five points of our strategic.
<unk> customer.
Experience is an area, where we lead today and they really feel like we can differentiate ourselves the product advantages. We've had are very excited to see what we're going to do now with these next generation products, whether it's with first solar or a new battery products. The fact that we're investing in their channel is a really big deal and so the dealer access.
The rate of programme now to answer the core part of your question is exciting to us because for US it's kind of a win win win the first investment we make helps them grow into new states. So if you take a look at freedom solar.
They're the most outstanding solar installer in the state of Texas, They want to now take what they've learned there and apply it in states like Colorado, and Florida, and we would love to help them by being a provider of capital, but we also as part of these investments lockean exclusivity with these dealers and so.
They are exclusive with us on all of their physical products, whether it be panels storage EV Chargers and then we also become exclusive with each other and financial products and so when you combine those two things together faster incremental growth exclusivity with both companies together.
The payback on an investment like this for US is quite quick and quite attractive and then of course.
We do this for an equity investment in the company, which we believe that.
These companies will be worth more and more over time. So it's really an attractive model for both parties and I think one of the ways to earn the trust of dealers is to make promises and deliver against them.
I think they are quite excited about the investments, we're making and I think they were delighted that part of those investments will be actually investing and many of them and helping them grow faster in this land grab we're in where there are 77 million homes that would save money today on our way to 100 million homes with only 4 million homes have solar we're really taking.
The approach that we need to invest heavily across all of our sales channels and one of the things I told the dealers that are installing dealer channel is critical to our success historically and it will remain a big focus of this company as we move forward.
Thank you.
Yeah.
Your next question is from Brian Lee with Goldman Sachs. Please go ahead.
Hey, guys. Thanks for taking the questions.
A couple actually on the financing side given some of the details here.
So you highlighted the Dorado, one fund and I think the release implied combined cost of capital is now less than five and a quarter.
Can you talk about what the cost on Dorado that fund was specifically and then also in terms of.
Volume visibility how many megawatts you now have kind of funded.
On the capital side.
Yes so.
Let me start the second one but the fund is roughly $350 million and then that will last us through all of this year.
<unk> into early part of next year and then the way to think about it as we had previously talked about our cost of capital at.
All in at five 5%, including loan and lease and.
We are talking about more than a 25 basis point reduction a lot of that is attributable to the lease fund as well.
Well.
Okay Fair enough and then I guess.
In terms of the new capital I don't know if you maybe you answered this value but.
Are you contemplating tapping the ABS markets or the <unk>.
The bank debt market is just trying to think about.
How you're.
Setting up the financing strategy I know overall yields on some of those securitization products for the solar sector kind of tipping into the 5% range. So.
Could you do something else this year that lowers your cost of capital further errors or are we kind of more static here.
At this five in a quarter.
If we think about it kind of going forward. Thank you.
So.
Lot to unpack there, but let me take it into pieces I think from.
How to think about 'twenty two capex for us, it's about providing the most flexible and the lowest cost of capital to as wider range of consumers. So we've added features into the.
The lease financing as well as we talked about over $2 billion of overall financing, including loans that allows us to go to a wider consumer base.
That's one I think there are more we have demonstrated the ability to lower our cost of capital in this interest rate environment and I think that is.
And I want to make also a lot of thought.
Capital.
Cost of capital.
<unk>.
So on deposit fee capital, which is less sensitive to interest rates and then as I've talked about as our balance sheet get stronger, which it is and as we grew our volume we get the ability to improve.
Improve our cost of capital.
Things like last hold back and other things so I would say that there are more.
<unk>.
Quiver as we think about cost of capital on an apples to apples basis of lowering our cost of capital on an apples to apples basis, but more importantly, you should think of us utilizing sandbox financially to go through a wider customer base.
Alright, Thanks, a lot guys I'll pass it on.
Your next question is from Julien Dumoulin Smith with Bank of America. Please go ahead.
Thank you congratulations team on the continued progress and hope you guys are well just a first quick question here just probably two part what percent price increase are you guys contemplating here on your customers I know been kind of trying to get at that earlier, just can you try to talk to that a little bit.
How much latitude do you perceive yourself as having considering what you said about 'twenty one here and then related to that if I'll throw the second one at the same time here the attach rates on the target.
Is the supply available out there to get you to 45% I know you commented on panel availability here, but just to reconcile 45% attach rates by the end of the year, given where you are there there's a little bit of a ramp, but obviously, there's a ramp and availability of supply there too just curious on both sides.
Yeah, Thanks, Julien and great to see you last month at the analyst day.
On the on the pricing front the way I would describe it as this.
As you know this is this is one of the most difficult supply chain environment for me probably the most difficult in my 30, plus year career. So it's hand to hand combat day to day week to week, we're trying to manage and make sure that we can actually not just <unk>.
Absorb the cost increases but ideally.
Architect and find ways to reduce our costs over time.
The way we've been thinking about this year as for the cost increases that we've had and any others that we anticipate we believe that we can one for one.
Take those cost increases.
<unk>.
Turning those into price increases and so far without materially hurting demand demand actually has accelerated.
Q4, Q1 and into Q2, so we feel really good about that and where that goes from here our goal would be to manage our supply chain so that.
There are fewer cost increases and over time as I said architect our products. So that they are actually more cost efficient over time on.
And the attach rate I think we feel quite comfortable with where we're headed on Sunpower financial.
Our long term goal is to get well above the 45% target we have this year, but the fact that we're already at.
41 in Q1 is terrific and so we have from a panel supply perspective from a sunbelt perspective, and obviously from a capital perspective, we have the inventory we need to serve both customer demand and the numbers that are consistent with the guidance. We gave you. This year. So we feel good about <unk>.
<unk> batteries and in capital relative to the guidance for 'twenty two.
Yes, and just specific to that at a higher level you talked about this 2024 122 guidance, what's the exit run rate that you're thinking about a corresponding to that again I get that there is a $400 per customer range here, but what does that imply as exit run rate based on where you're starting at 1700 Q1. If you can kind of talk about like 22.
That range being an average and your 17 now what does that mean kind of <unk> exit.
Yes, so actually the back half weighted.
No no.
I understood. Your question I think the way to think about it is as the.
As we go through the rest of the world.
We have provided clarity on how we get from 1700 first quarter to an average off until midpoint 2200.
The exit run rate.
He is going to be higher than the midpoint of the range.
And that is largely driven by as I said, the Sun power financial that actually it would get up to 45% exiting the year as well as <unk>.
Sungard starts to kick in in terms of the tax rate.
Got it excellent thanks, guys. Good luck.
Hey, guys. Thanks, Thanks Julien.
Okay.
Your next question is from Graham price with Raymond James. Please go ahead.
Hi, good afternoon, Thanks for taking my question.
So it's been about a year since you started the EV charging partnership.
With wall box. So just wanted to get an update on how thats progressing.
Yes, I think Graham.
We're quite excited about the EV charging opportunity for <unk>.
A number of reasons one of which is we know that EV charging customers people, who have an electric vehicle today, 40% of them have a solar system solar product on a roof.
And so we think theres going to be the strong overlap between people, who have electric vehicles that people, who need solar and then the interesting thing is as we look forward. In addition to the fact that the Oems have an enormous number of new Evs coming out there I think it's been pretty well documented that the grid doesn't have the capacity to support that incremental amount of charge.
<unk> will want to do across the nation. So I think for practical purposes, we really view these things as being at or locked in like together I think it's still relatively early in the EV strategy with <unk>. They make a terrific product we're happy with the partnership.
I think we've had the most success is theres a great opportunity for us on new homes to really install a complete solar system with panels batteries in EV Chargers all integrated into one so that's probably the area that we've seen.
The biggest bump to begin with but.
We'll say stay tuned we have more working on in that space and we're excited about where this goes as we move forward.
Got it thank you for that.
And then maybe switching gears just a little bit.
Florida net metering has been in the headlines recently, so just wanted to get your thoughts.
On the veto by government at the Santos HD 741, and just that whole situation.
Absolutely, yeah, I'm going to make some comments at the close of our call, but I'm happy to comment on it now we thought it was.
Obviously very much in line with the with the needs and desires of Florida residents.
I'm pleased to say that we're actually seeing quite a few policy tailwind in nearly every state where we do business the.
The governance Santos Vito was one.
Was great to see because I think at the end of the day, Florida residents are really going to be impacted by these higher utility costs and many of the folks in the state will now benefit from getting their full net energy metering program benefits and so I thought it was frankly, a courageous move and I thought it was a terrific move that.
Be very popular has been very popular in Florida, and if you take a look at California, I think part of the reason there's been a delay.
The proposed changing of the program is for this very reason.
Is the exact wrong time in history to takeaway solar benefits at a time when the UN report suggests we're going to be doing permanent damage to the planet by 2030 at a time when utility rates are rising at record amounts. This is the time, where most states are really adding incentives and we're quite pleased to see that.
Understood makes sense I'll pass it along.
Thanks.
Your next question is from Philip Shen with Roth Capital Partners. Please go ahead.
Hey, guys. Thanks for taking my questions.
Hey.
The first one I have is on module availability. Peter you were talking about you have enough to meet customer demand.
Sure guidance.
Our checks suggest that your module supply is actually very tight.
And that.
It's actually tough getting modules.
And one week 360 years are available then.
They are not and people are needing to.
Dance around.
It seems like Youre getting they're getting through it but can you talk through.
That could limit.
What's beyond the guidance and then also the Pvs six.
The <unk>.
Key monitoring system.
Or device that you guys have it seems like there's a substantial delays in that equipment.
Which is required for commissioning systems. So I was wondering if you could talk through.
What's going on from a.
Inventory was actually a supply chain perspective, with a little bit more detail. Thanks.
Yeah. Thanks, Phil So on the let me start with panels as you might remember as we made a change to our supply agreement with our current panel supplier one of the big improvements to the agreement is that it's a one way exclusivity. So they are exclusive with us, but we have the ability to seek out other panel alternatives and as you.
Might imagine we've taken advantage of that and that was one of the very first things. We did once the new supply agreement was finished is that we have reached out and we're working with a number of panel suppliers. So from what we can see for both demand this year and we've got a pretty good view of where demand goes because we can see much higher in the funnel that we report on publicly.
But also where our guidance is I think we feel very comfortable with our total panel supply most of those panels will still be from our existing panel supplier, but we do have.
Two other panel suppliers will be working with as the year goes on.
Mature to announce those on this call, but I will say that we're.
We are well prepared to make sure that we have enough panel supply across the board to to serve customers well and then PBF six is actually.
Not necessarily always court required for commissioning that it is required to be able to do pedal level monitoring and there are some delays primarily chip related delays on that particular component.
Not really necessarily going to slowdown the installation of.
Solar systems, but it may slow down the ability of customers to be able to do their panel level monitoring as fast as we'd like to so that's one of those delays that we're day by day hand by hand combat we're working to see how fast we can get those back in stock and get those back in and good supply for customers, but we don't expect.
To have a material impact on <unk>.
The guidance, we've given this year and we don't expect it to have frankly, a material impact on our customer experience for this year.
Great Thanks for that detail.
Two other panel suppliers it sounds like.
You can pick up some slack there.
And it's probably good problems as you know the in general the dealers we've talked to are very happy with the new management team. There. So it sounds like Youre doing a great job.
As it relates to them I do think I'm.
Sorry go ahead <unk>.
Yes, that's okay I was just going to say I think.
Having having demand problems is the highest class business problem. I think you can have so I think along with our dealers. The fact that we're working hard to get more supply more than we thought we needed. This year, that's a delightful problem to work out so as far as supply chain problems go we need more panels, because we got more demand that's it really.
Good one that we're happy to work on that together sorry go ahead next question.
Thanks, Peter and Thats, what it sounds like the situations.
So.
In terms of the first solar deal.
I think at the analyst day, it sounded like maybe.
We could see.
Commercial offer within 18 to 24 months.
That said when do you think the deal could get signed and finalized. So are we talking about a quarter or two or do you think it could drag onto a year before.
The deal becomes fully consummated.
And what are the gating factors as well.
Yeah, well as you might imagine I mean, this is quite an exciting opportunity for both companies I think for first solar I'll, let them speak for themselves, but I think they'd be quite excited to be able to enter the residential business and become a big player in that part of the world. They have been primarily focused on utilities and utility scale and obviously, we're quite excited about the <unk>.
Opportunity to really reinvent the panel world and been something that's never existed before and be able to have something thats, a big exclusive for our dealers and something that we think will delight our customers. So as you might imagine as we go through a deal like this it just takes a little bit of time, because there are quite a few elements that both companies want to work on.
Together, but I would expect we'll have an outcome of those discussions in the next couple of quarters.
So I don't think this is something that drags on for years I think I think we will we will.
Are you able to talk more about where that's headed in the next couple of quarters.
And then as you look forward I think.
Our opportunity to work with companies like first solar and many others.
There arent really any any gates to that I mean, we're our heritage is really on hardware innovation.
<unk> talked about at the Analyst day, we also think that software will be as important as hardware.
And we're really committed to the innovators in this business, we really want to in addition to be seen by customers as having the highest quality customer experience. We also want to continue to have the most innovative products and the most innovative software. So look for us to continue to double down in those areas.
As we as we roll out this new strategy together.
Thank you and one last question, which business units.
If that's the right term is do you think it's more profitable.
Would you say sunpower direct or the dealer channel and maybe it's going to be tough for you to.
Specify.
How would you expect that mix to change over time.
This was like asking which of your children as your favorite.
I think that's a tough question to answer but how about I'll give you. This for color I think in most business models anytime you own a direct business you would do that with the belief that you can become more efficient and that would be more profitable. There's just fewer intermediaries and theres fewer steps and I think you'd see that same thing play out here I think are installing deal.
Their business is very profitable both for our dealers and for Sunpower, but I think it would be fair to say, our sunpower direct business and by the way I also include Blue Raven as a direct business, even though it's not called Sunpower direct but.
But I think both of those businesses are.
Even more profitable.
Great. Thanks again.
Thanks, Phil.
Your next question is from Kashi Harrison with Piper Sandler. Please go ahead.
Good afternoon, everyone and thank you for taking the questions.
So just so just some real quick ones from me.
In the past you guys have highlighted year over year bookings growth.
And so I apologize if I missed this because go around but can you provide that number for Q1 and then.
Looking at your quarter over quarter growth, it's strong looking at your year over year growth is strong and so I'm just curious.
During all times of the World.
Now, having said that I think the other thing we take a look at is where's the demand coming from.
I don't think it's uniquely focused on California, I think we mentioned in the last call and we saw it again this quarter.
Quite strong demand from Texas, Florida, and the northeast.
So those areas continue to be very strong and I think we've talked about our California business.
And non California being about 50 50.
By the end of the year and so we're on track to achieve that kind of geographic diversity.
And we're seeing good growth and good good demand outside of California, right now.
That's very helpful color there Peter and then just one quick follow up.
Just looking through the cash flow statement it looks like there was a <unk>.
Decent sized use of working capital just wondering what that pertains to and then maybe if you could just give us some some guidance on how to think about changes in working capital over the course of the year. Thank you.
Yeah.
Yes.
Peter I can take that.
So a couple of things country right one.
We exited first quarter with a very strong balance sheet that's one.
Second as you parse through the pieces Thats in the bridge in the appendix.
Bill.
The use of working capital was related to sent by financial as you know that our model is not to keep assets on the on the books.
But time to time, they may be working capital that straddled the quarter.
From a first quarter perspective, as you bridge that from a modeling point of view for the rest of the year as well as.
The out years beyond 2022, you would see.
To see that number come down and actually we can get cash back onto the balance sheet as we start to utilize.
Third party capital that we alluded to earlier in the call.
But just for reference we said we raised over $2 billion of third party capital. So the 60 odd million dollars that you see.
In the on the on the page.
Will reverse.
Over the next few quarters.
Helpful. Thank you.
And that answered terrific and answer session for today.
I'll now hand, the call back to Mr. Peter Pharisee for final comments.
Terrific. Thank you very much and thanks to everyone for joining us again today and for your support of Sunpower as.
As I promised I'm going to leave you with a couple of our thoughts on the state of the industry and government policy.
Most of you know our household electricity bills are rising rapidly across the country up more than 15% year over year in number of states. According to the U S Department of energy and consumers urgently need a more affordable stable and resilient energy solution.
Recent analysis from the White house found that the average American family could save $500 a year from using clean electricity like rooftop solar and heat pumps to power their homes.
In order to make solar more accessible to more Americans and all income levels across all geographies. We believe its imperative that Congress pass energy legislation that includes a long term extension of the solar investment tax credit or ITC at 30% value as utility rates rise this extension could extend rooftop.
<unk> solar savings to more than 100 million homes by the middle of this decade and the Bill would also create more than 1 million clean energy jobs across the next 10 years, which is a high priority for all of us and for the administration.
And earlier the good news at the state level is that we're actually seeing quite a few policy tailwind.
Particularly in the state to redo business.
Governance Santos vetoing, the bill that eroded the states they would have eroded the state's net energy metering program was terrific in California, there's been a substantial delay the proposed changes to the net energy metering program and these developments clearly show the popular opposition of the people to policies that would reduce the benefits.
Of rooftop solar in fact, the majority of states are actually increasing incentives and improving rate designs for consumers to move to sustainable clean reliable and all electric forms of energy.
While sunpower would not be significantly impacted by the results of the pending a b C. D. The investigation, we are aligned with our solar industry colleagues and urge the commerce Secretary to issue a preliminary decision as soon as possible and no later than the end of may removing the curtains.
The current uncertainty in the industry is vital for renewable energy jobs growth consumer benefits and the ability of the U S to achieve president Biden ambitious and important climate goals. We are fully supportive of increasing American manufacturing in the solar industry and in fact, we hope to be good partners with.
Those who do this but it will take meaningful and substantial government incentives to make us.
Viable reality big Thanks, again for everyone.
Tuning in for our first quarter earnings call and look forward to talking to <unk>.
Our next call. Thanks.
That concludes today's conference call. Thank you everyone for joining you may now disconnect stay safe and well.
Great.
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