One of America’s leading solar energy companies has announced the details of a restructuring plan which will cut its global workforce by 25%, close a 700 megawatt (MW) manufacturing facility, and reduce 2017 capital expenditure — a plan to which investors have reacted relatively positively, with company shares increasing by 14%.
In November, SunPower published its third quarter earnings which reported a relatively healthy quarter, but presaged a constricted future. “While prospects for long term solar industry growth remain strong, we are seeing a significant near term market dislocation in the solar market that we expect will impact our financial performance through 2017,” explained Tom Werner, SunPower president and CEO. As such, the company announced a restructuring plan “to focus on improving cash flow through the current market dislocation while positioning the company to succeed in the next phase of industry growth.”
SunPower this week confirmed this restructuring, and gave firm details as to what it would look like.
“As we announced in our third quarter 2016 earnings release, given the current market dislocation, we have made the strategic decision to implement a broad restructuring program to position the company for sustained, long term profitability,” said Tom Werner. “We believe that our restructuring initiatives will enable us to successfully navigate through the current market transition and maximize cash flow while successfully positioning the company for the next phase of industry growth.”
The company will therefore implement the following initiatives:
- Rationalize capacity to balance production with near-term profitable demand through the closure of its ~700-megawatt (MW) nameplate capacity Fab 2 facility
- Implement a global workforce reduction of approximately 25% or 2,500 employees
- Reduce 2017 annual operating expenses to less than $350 million
- Substantially decrease 2016 inventory to improve working capital and de-lever its balance sheet
- Reduce annual 2017 capital expenditure by more than 50% to approximately $100 million
- Continue to invest in next generation cell and module technology as well as complete solutions
This will also have an immediate impact on the company’s fourth quarter earnings, in which it expects to record restructuring charges of at least $150 million. SunPower expects to record a fourth quarter GAAP and non-GAAP charge in the range of $50 million to $55 million as a result of the anticipated sale of above market polysilicon.
SunPower is subsequently expecting to incur total restructuring charges of between $225 million to $275 million through the end of 2017, of which approximately 30% will be in cash. For the full year 2017, SunPower is predicting revenue of between $1.8 billion and $2.3 billion on a GAAP basis and between $2.1 billion and $2.6 billion on a non-GAAP basis; non-GAAP operational expenses of less than $350 million, capital expenditure of approximately $100 million, and GW deployed in the range of 1.3 GW to 1.6 GW.
Despite the self-inflicted wounds, investors appeared content with SunPower’s plans, with shares growing 14%.
Don't want to miss a cleantech story? Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.