SunPower Corporation (SPWR) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the SunPower First Quarter 2023 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Weinstein. Please go ahead.

Good morning. I would like to welcome everyone to our first quarter 2023 earnings conference call. On today's call, we will begin with comments from Peter Faricy, CEO of SunPower, who will provide an update on the first quarter announcements and business highlights followed by an update on progress towards 2023 guidance, including California sales, backlog and financing. Following Peter's comments, Guthrie Dundas, SunPower's interim CFO, will then review our financial results. As a reminder, a replay of the call will be available later today on the Investor Relations page of our website. 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 2023 Form 10-K and our quarterly reports on Form 10-Q. Please see these 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 press release for the appropriate GAAP to non-GAAP reconciliations. Finally, to enhance this call, we've posted a set of PowerPoint slides, which we will reference during the call, on the Events and Presentations page of our Investor Relations website. In the same location, we have posted a supplemental data sheet detailing additional historical metrics. With that, I'd like to turn the call over to Peter Faricy, CEO of SunPower. Peter?

Thanks, Mike, and good morning, everyone. I'm pleased to be with all of you to discuss both our Q1 2023 results and the progress we are making on our 5-pillar strategy to build SunPower into the world's best residential solar company. In the first quarter, we continued to show strong customer installation growth that track towards the high end of our full year 2023 guidance of approximately 10% to 30% customer growth. We reported $1 million of adjusted EBITDA this quarter, with $10 million of business unit cash generation. As we highlighted on our last call, adjusted EBITDA was expected to be low this quarter, impacted by higher sales and marketing expense to generate strong bookings volumes in California before the expiration of NEM 2.0 rules on April 15. We were also affected by unfavorable California weather conditions throughout Q1 that kept crews idle, increased costs and delayed certain installations in the state. We expect to catch up in California over the next few quarters. Importantly, we remain confident in our plans to achieve our full year 2023 guidance of between $125 million and $155 million of adjusted EBITDA based on 90,000 to 110,000 new customers and adjusted EBITDA per customer before platform investment between $2,450 and $2,900. Please turn to Slide #4. We added 21,000 new customers in Q1. This is a 27% increase year-over-year. Revenue also grew at 32% year-over-year as price increases continue to offset the impact of higher product and installation costs. New order bookings grew fastest in our direct channel at 97% year-over-year. With strong bookings growth under NEM 2.0 in California, our backlog increased to 23,000 retrofit customers with another 39,000 in the New Homes channel. We expect the backlog to increase further in the coming weeks as many of our dealers continue to enter orders into our system after concentrating efforts solely on customer NEM 2.0 applications in March and April. Adjusted EBITDA per customer came in at $1,200 before platform investment, which reflects the special seasonal effect of California sales and marketing expense and the weather we discussed earlier. SunVault Energy storage system sales are showing early signs of strength in California under NEM 3.0 rules. In recent weeks, we are seeing this trending towards attach rates over 20% in our direct channel in the state. Lease demand continues to grow, with a 268% increase in contract volumes in Q1. As we've noted previously, further growth for leasing is expected in 2023 and beyond due to bonus tax incentives under the Inflation Reduction Act. SunPower remains customer-centric and agnostic towards lease or loan financing, and we believe that our current access to capital markets as a top-tier installer is a major competitive advantage. Please turn to Slide #5. Our Q1 customer growth of 27% year-over-year positions us well to achieve our full year customer guidance of between 90,000 and 110,000 customers, a 20% growth rate at the midpoint. Revenue grew to $443 million, a 32% increase that reflects higher pricing, and we believe is indicative of the continued strong value proposition of solar in this inflationary environment. Please turn to Slide #6. We know that demand and sales trends are top of mind for investors lately. I want to provide you with an update on California NEM 2.0 results and a preliminary look at early NEM 3.0 trends, as well as our refocused sales efforts back to the rest of the country now that our successful push for NEM 2.0 customers is completed. In California, Q1 retrofit bookings to existing homes were up 135% year-over-year in our direct channels which outpaced our peers and boosted our market share, resulting in a state backlog that exceeds 6 months. The pivot to NEM 3.0 began in April, with a transition period that included a late NEM 2.0 surge in the first half of the month followed by weaker initial bookings because of the earlier pull forward of demand. However, with many of the dealers fully engaged on completing NEM 2.0 interconnection applications for customers in March and April, we expect to continue registering purchase orders and bookings into our systems for several more weeks. This means we don't have the full picture of either NEM 2.0 or NEM 3.0 impacts until the incoming data is finalized over the next month or 2. One area that's not been affected by demand pull forward is battery storage sales. Here, we are seeing some early indications of higher attach rates in California through our direct channel. At this time, we are expecting to see the April data coalesce above a 20% attach rate, with stronger battery sales expected because of higher customer return on investment under NEM 3.0. We believe these attach rates have the potential to climb higher and that SunPower is well positioned to deliver SunVault storage systems to customers, with inventory levels entering 2023 that we believe are sufficient to meet stronger demand for the year. In the rest of the country, we continue to see booking strength in the Northeast and the Mid-Atlantic, with Q1 gross bookings up over 100% in certain states including Connecticut, Virginia and North Carolina. In 1 of our largest markets, Texas, gross bookings have come on strong, up 38% year-over-year for the quarter. To take advantage of the California market in Q1, we focused our sales resources on that state, particularly in our direct channels. While this was a factor affecting softer results in Florida and Arizona, this was contemplated within our annual guidance. The New Home segment has been outperforming our original expectations so far this year. An April surge in California has brought year-to-date New Homes bookings tracking at 26% growth year-over-year, including Multifamily, with homebuilders indicating that they are selling homes more briskly than previously anticipated. We are also seeing rapid growth in the still small but important Multifamily segment, with Q1 2023 bookings exceeding all of that of 2022. The bottom line is that we're off to a solid start for the year coming out of Q1, and we're currently tracking to achieve our full year customer guidance. Please turn to Slide #7. Conventional electric utility rates are the primary competition for our industry, and they have continued to accelerate upward of 15.4% year-over-year in February, despite the moderating bulk of wholesale power, cost of wholesale power and key fuels such as natural gas. As you can see on the right, 10 states continue to see increases greater than 20% year-over-year, and states such as Texas and Florida, our experience has rises of 19.5% and 16.3%, respectively. As we've noted, we believe the steep rises continue to elevate the value proposition of residential solar as one of the most powerful ways to stabilize and reduce home energy bills. Although fuel prices have declined in recent months, the Edison Electric Institute is projecting a 20% increase in electric utility capital investment from 2022 to 2024 over the previous 3 years. As these investments are recovered through electric bills, we believe the value of customer-financed rooftop solar is likely to continue rising. Please turn to Slide #8. Next, I'll share some of the most important progress we've made in Q1 as we move forward with the 5 pillars of our long-term strategic plan. For customer experience, SunPower remained the #1 ranked home solar installer last year as indicated by our rankings and reviews on various platforms, including EnergySage and Google. For products, we continue to diversify our panel supply agreements, securing enough volume to fully address our anticipated 2023 demand. For growth in April, we finalized an investment in Minnesota-based Wolf River Electric through our Dealer Accelerator Program. Wolf River, the company's newest and now third largest dealer, will sell SunPower panels, storage, EV charging equipment and financial products. With this relationship, SunPower plans to significantly expand its geographical footprint across Minnesota, Wisconsin and Iowa. In the New Home segment, we expanded beyond California to 8 new states and lean into our Multifamily home business with 3 new deals in California. For digital, we've developed a new scheduling software in the first quarter which we believe will enable more reliable appointment times and provide customers with real-time tracking of technicians traveling to their site. We also updated our digital tools for dealers to make managing inventory faster, easier and more accurate. And finally, SunPower Financials' lease business grew 268% year-over-year in the first quarter to comprise 68% of our Q1 bookings. We expect the lease business to continue growing rapidly in 2023 and beyond, because of the favorable tax treatment under the Inflation Reduction Act. We have also announced that we've secured financing commitments to fund more than $1 billion of residential solar and storage loans in recent weeks. Through this nonrecourse vehicle, SunPower Financial, will continue to provide customers with attractive loan options for their transition to clean energy. Please turn to Slide #9. We are very excited to share with you the California launch of our Virtual Power Plant offering to customers and partnership with OhmConnect. The program allows participating customers to earn financial rewards for allowing their SunVault storage system batteries to periodically utilized by local utilities to help stabilize the grid during peak energy usage. Please turn to Slide #10. I want to emphasize the strength of our corporate and customer financing model during the recent period of banking turbulence. As previously noted, our low-risk financing model is based on the off-balance sheet origination of loans and leases for customers. With similar origination fees for either loan or lease, we are agnostic and strive to act in the customer's best interest. We recently announced we secured nonrecourse financing commitments to fund more than $1 billion of residential solar and storage loans from Hannon Armstrong, Credit Agricole, and as of this week, KKR. Through these transactions, SunPower Financial will continue to provide customers with attractive loan options and tenures up to 25 years for their transition to a cleaner and lower-cost future. We've also applied for conditional loan guarantees through the U.S. Department of Energy's loan programs office that are designed to make distributed energy resources including rooftop solar, battery storage and Virtual Power Plant-ready software available to more American homeowners. If granted, we expect these financial benefits to be available for our customers in 2024. Our lease net bookings continue to grow robustly, with our dealer network leading the way as the value of leasing solar under higher utility rates becomes an increasingly attractive option. Our all-in cost of capital for leasing remain below 6.5%, including tax equity, with the added advantage of lower interest rate sensitivity across the full capital stack. We believe this to be equal or better than our competitors. We believe that we will have ample facilities in place to finance a growing lease pool through 2023, and we are in late-stage discussions that aim to close additional funding arrangements for further growth. Before I turn it over to Guthrie for the financials, I want to share some exciting news. This week, SunPower is bringing on important senior leadership talent as we welcome Pat Bigatel as our Senior Vice President of Sales. With over 20 years of experience, Pat is a highly accomplished leader with a proven track record spanning operations, sales and business development, marketing and brand management for both emerging and large-scale organizations. We are also proud to announce that Jennifer Johnston will join the company as Executive Vice President and Chief Operating Officer effective May 8. Jennifer is an accomplished executive with over 2 decades of experience leading teams in operations, manufacturing, logistics and finance. She joins the company from a leading-edge robotic technology company that specializes in automating e-commerce order fulfillment, where she served as its Chief Operating Officer and Chief Financial Officer. Prior to this, Ms. Johnston spent 10 years at Amazon in North America and Europe, where she held finance and business leadership positions across Amazon Fulfillment, Amazon Logistics, Amazon Go and AWS, driving operational and financial scalability across each of the businesses. And on that note, I'll turn it over to Guthrie for more details on our Q1 results. Guthrie?

Thank you, Peter. Please turn to Slide 12. For the first quarter, we are reporting $1 million of adjusted EBITDA and $443 million of non-GAAP revenue, an increase of 32% year-over-year. We added 21,000 new customers in Q1, a 27% increase year-over-year that is tracking above the midpoint of our full year guidance of 90,000 to 110,000 customers. Adjusted non-GAAP gross margin dipped 17.1% for the quarter, largely the result of challenging weather that resulted in delayed installs in our SunPower direct channel. Adjusted EBITDA per customer before platform investments also declined to $1,200, largely as a result of NEM 2.0 sales and marketing expense, weather and the effect of typically lower seasonal installation volumes early in the year. We continue to expect to benefit from a combination of higher pricing, growing origination fees, origination volumes at SunPower Financial and the operational leverage gained from increasing sales. As we highlighted at the Analyst Day last year, platform investment of $24 million for the quarter is primarily products, digital and corporate OpEx. Our balance sheet remains lean after the January retirement of convertible debt with, $116 million of cash on hand and $77 million of Net Recourse debt. As a reminder, we completed the sale of our last remaining 0.5 million shares of Enphase stock holdings in January at prices averaging approximately $250 per share. We continue to value our ownership of lease renewal net retained value in SunStrong using a 6% discount rate. With growth in the portfolio, we now estimate the value of our stake at about $270 million. Please turn to Slide 13. As Peter mentioned earlier, we are reiterating our 2023 guidance today for $125 million to $155 million of adjusted EBITDA, driven by an anticipated 90,000 to 110,000 incremental customers with adjusted EBITDA per customer or platform investment of $2,450 to $2,900. Platform investment continues to be primarily comprised of products, digital, and corporate operating expense that drive our company towards larger operational scale, growing adjusted EBITDA per customer and a superior customer experience in the years to come. On a per customer basis, platform investment is projected to peak in 2023 as we expect us to grow below the rate of customer growth for the rate per customer declines over time. With California NEM 2.0 now in the rearview mirror, we are refocusing our efforts across the country and on the execution of our long-term strategy. Looking forward, beyond 2023, we continue to see several positive trends that are expected to help propel our business, including the value added by the Inflation Reduction Act, higher attachment rates for storage and financing and a potential recovery of New Homes in time. We continue to build a first-class platform of assets that we believe delivers the world's best customer experience in the industry. With that, operator, I'd like to turn the call over for questions.

[Operator Instructions] Our first question comes from the line of Kashy Harrison with Piper Sandler.

So maybe just the first 1 surrounding EBITDA. You highlighted in the reconciliation, call it, $8 million associated with businesses you're exiting. Can you share some color on what's going on there, which businesses you're referring to? And then it looks like EBITDA was light at $1 million. How do you reconcile the light Q1 EBITDA with the full year EBITDA target of $140 million?

Kashy. I'll take the second question, and I'll let Guthrie answer the first one. So, on some color on EBITDA for the full year, one of the things that we believe strongly in, is running the business with a long-term perspective. In other words, we're willing to make short-term investments so we now have a high ROI and a great payback, and we're not trying to hit a particular number in a particular quarter. We're more focused on the full year and we're more focused on growing shareholder value over the long term. So, when we had an opportunity in Q1 to invest, to take advantage of what was demand that exceeded our expectations in California, we did exactly that and we're pleased with that investment. And 1 of the reasons we're pleased with the investment is that the customer acquisition costs were relatively modest for California and the conversion rates were much higher than during a normal cycle, and that's exactly the time as a business that you should be investing to grow that customer base. So as we exit Q1 with more than a 6-month backlog, that's very healthy for the company and it's a super good investment in terms of its return for this year. So even though it's a short-term hit to EBITDA, it's a long-term benefit in terms of being able to get more business and lining up more efficient business in California, in particular, this year. I'll also say, you heard me mention on the call the weather impact. There was a new word I learned this quarter called Atmospheric River. California got hit by quite a few of them. We measure the number of weather days where our crews are impacted, meaning they can't work that day because it isn't safe. We had 76 in Q1 of 2022. We had over 1,000 in Q1 of '23, just to put it in perspective. So even though we work over time, we work weekends, we actually would have had even higher customer growth in that 27% had we not been impacted by weather. But weather and investments are 2 of the bigger pieces. And then I think the third piece I'd highlight is for our dealers, particularly the California dealers, they acted just like we did. This was kind of a unique event in California in Q1, and many of them fully focus their operations on acquiring customers, helping customers qualify by submitting their interconnection applications. And I think that's the right long-term decision for the business, both for our dealers and both for us. So we expect to see some of the dealer business we would have normally gotten in Q1 come to fruition in Q2 and Q3. Guthrie, do you want to comment on the first question?

Yes. So the reference to exited businesses. If you recall, we closed the sale of our C&I business to Total Energy's last May. And as a result of that, there's a small amount of ongoing obligations that we have that we expect to kind of decrease over the next few quarters and few years. So the incremental expenses that you're referencing relate to -- nothing new, but just ongoing impact of some of those previously-exited businesses.

That's helpful, guys. And as my follow-up, and Peter, you may already have answered this. But on Slide 18, you highlight that you have $116 million in cash and you expect to generate positive operating cash during 2023. Looking at the cash flow statement, SunPower used about $135 million of operating cash in Q1. And so is the expectation here that as you go into Q2 through Q4, there's a massive improvement in operating cash because there's less investment? Or are you maybe defining cash -- are you defining cash generation differently than operating cash flow?

Yes, I'll take that one. So we -- in the definition, we're excluding the specific impact of working capital, so that's 1 factor. There was an investment in working capital that was made in part due to seasonality and in part due to a planned inventory increase in the first quarter, and we expect that to benefit us over the rest of the year in terms of the cash impact.

Your next question comes from the line of Sean Morgan with Evercore.

Regarding some of the investments you're doing especially with respect to SunPower Direct, I realize that we're increasing some of the product in digital and corporate OpEx related to that program. But -- and this might be a little bit difficult to do, but is there any way to sort of strip out some of that incremental investment and look at what your customer acquisition margins would be on those new more digital customer acquisition versus your, I guess, the old SunPower way of doing things? And what sort of margin accretion you're seeing from that new channel, sort of -- if you sort of strip out all that additional investment that you're realizing currently?

And Sean, just to clarify, you're specifically asking about customer acquisition costs?

Yes and specifically as it relates to sort of the digitization of the customer acquisition to try and drive up margins.

Yes. So a couple of things. I think it's a terrific question. So we -- as we talked about at our Analyst Day, one of the areas that we do think we can drive more efficiency in between now and '25 is customer acquisition costs. I've told all of you guys a few times, coming from the e-commerce world, it's shocking how much customer acquisition costs are in solar. The industry figures, I think I see are like $4,500, $5,000, which is shocking. It's way too high, and it's, frankly, it's not good for the industry. It's not good for customers to have to pay for that in the end. So a couple of the things we've done to drive it down are actually non-digital, and then the biggest effort going forward is on the digital side. So on the non-digital side, the 2 things we've done are speed up our partnership. So the IKEA partnership that's already launched in California, the partnership with General Motors will be launching later this year, those are really efficient ways to draw new customers with a relatively low customer acquisition cost. And these are customers that are, I would say, highly qualified. Conversion rate is very high, and we like those kind of efficient channels. But the bigger lever over time is the one that you mentioned, and this is one of the big lessons for my time in Amazon, which is how do we invest in the tools that allow us to build software to make digital customer acquisition much more efficient over time? And one of the big things you have to do is you have to build an essentially an experiment machine. How do you really experiment with messages and different ways to attract customers? And you have to build it in a way that it learns by itself and it's able to continue to make better and better investment decisions over time. We've begun to see some of that work this year, but I think we're really going to be seeing the benefits of that in 2024 and 2025. One of the things that we do is we actually provide a service across all of our channels. So our customer acquisition isn't exclusively for SunPower Direct. We actually acquire customers for our dealers, which they value a great deal. So the benefits that we're driving here really affect all of our channels, including now Blue Raven. So the customer acquisition process that we use benefits all the channels across the company.

Okay. That's helpful. And then second question is sort of on the battery attach rates. I realize you guys are climbing in terms of the 20%. There's still an 80% of the market, and I think this is pretty standard. But what I'm wondering is what -- in terms of customer capture and stickiness of those systems, if somebody is a customer that gets the initial install from SunPower, what sort of, I guess, percentage conversion would SunPower see if they then elect to later add of battery? Is it like 90% where it kind of has to work with the existing system? Or is that a kind of a thing that would be open to really any dealer that's sort of out there competing in the market to try to sort of sell that secondary battery when it does get attached in the initial install?

Yes. So 2 comments I'll make about battery attach. One is we're really quite cautiously optimistic about what we're seeing in California so far. Obviously, we're literally just weeks into this new NEM 3.0, but our battery attach rates, we mentioned we think it will be over 20%. The last 3 weeks have been, in our direct channel, 26%, 32% and 47%, so we're really beginning to see an acceleration in this channel. I think it's way too early to make a conclusion on the [ shed ]. It's still early in the process. The numbers are small so I want to give the appropriate caveats, but we're really seeing some real momentum on the battery side. And I think for customers in California, I think it will almost be a standard part of the package now. It just makes a lot of sense to include a battery in the system. And the early view that I see from California, system sizes that are actually a little larger than they were in Q1 and battery attach rates that are quite a bit higher than they were in Q1. In terms of how we think about the battery going forward, 1 of the things we're doing for SunVault 2.0 is ensuring that it's backwards compatible so that we can do exactly what you're describing, Sean, which is we really want to be able to have a battery that we can sell to all of our existing customers. So when that launches in the second half of 2024, it's our expectation that we'll be able to cross-sell that across our entire customer base. Our current SunVault product actually is backwards compatible for the previous 1 or 2 generations before the solar we're selling now, so it really does apply to most of our customer base. But I think all the batteries we introduce as we go forward have to become backwards compatible because I think customers will be interested in adding batteries for the lifetime of their solar ownership.

Your next question comes from the line of Julien Dumoulin-Smith with Bank of America.

Look, I wanted to just jump in and talk about the trends in adjusted EBITDA and customer adds here quickly. First, can you discuss the initial trends on customers from NEM 2.0 to NEM 3.0? I know you couldn't specifically quantify yet, but just emphasis on trends, what you're seeing. In theory, shouldn't you be seeing a positive bias to customer guidance here? I know it's unchanged quarter-over-quarter here, but it seems like that would be a potential positive revision territory. And then related on the sort of value per customer metric, given the California bias, given the pivot to leases, wouldn't there be an upward bias, whether that's in the full year number or on a multiyear basis across '23, '24 given these trends here quarter-over-quarter?

Yes. Julien. I think if I start with your question on California and the California bias, interestingly enough, if you go back to the call we had a few months ago, we gave our guidance of 10% to 30% growth for the year, roughly midpoint of 20%. I think a number of folks were, I could say, skeptical as to whether the industry was going to grow that fast. And I think after Q1, we feel increasingly confident that we'll be within that guidance and we were pleased that even with the weather impact, we were above the midpoint of the guidance, closer to the high end of the guidance. And interestingly enough, I mean, I think our share of California is a strength right now. The fact that we have a 6-month backlog of NEM 2.0 customers and we're still now booking NEM 3.0 customers means that we're likely to have a really terrific business this year in California. I think it's premature to call any kind of potential upside to both customers and EBITDA per customer because the first quarter isn't yet, I think, a good indicator of what the full year looks like. So when you take a look at bookings perspective, the heart of the booking season, if you will, is May through September, so we're really just getting into the thick of it right now. I think we'll have a better view on is their customer upside or EBITDA per customer upside as we get through the next quarter or two.

Got it. Excellent. And then just when you think about given that lease component here, do you want to talk about lease versus loan in the pivot and maybe what that does in terms of your attractiveness for potential dealers, et cetera?

Absolutely. Well, one of the things that we're really benefiting from is the fact that we've been agnostic. We've been talking about this the last couple of years. We've had a strong lease program and a strong loan program. We talked about our ability to pivot quickly. I'm really, really pleased how quickly we pivoted. We did not expect, to be honest with you, the kind of growth we had in leases in Q1. And really, as we dig into it, I think it's for a very rational reason. Right now, on the consumer side, leases are more attractive than loans. As you think about the interest rate changes that have happened, they've had a one-for-one impact on increasing people's loan payments. And you're seeing loans increasingly at higher interest rates, which consumers do not find as attractive because of the factors we talked about, of the interest rates being lesser factor in leases throughout the capital stack. Leases are actually a little bit more attractive for consumers right now, so the fact that we're able to pivot and grow so fast is terrific. One of the big milestones that we're hitting is Blue Raven. I think someone asked on our last call, Blue Raven has traditionally been loan-only, and we're now pivoting them to move over and they'll be selling their first leases this month. So we're seeing that across a lot of our dealers. It's really -- it's a new kind of sales process for our dealers, so we're actually doing quite a bit of work to gear up. But I think in the ideal world, our direct channels have always been this way, but I think for our dealers, it's important for them to be able to sell both products. And I think particularly with the IRA adders, as we've talked about, everyone is going to have to be really, really good at the lease business. So we're pleased with the Q1 results, and we expect the lease business to continue to grow throughout this year.

Your next question comes from the line of Ben Kallo with Baird.

Maybe first -- sorry, just on new banking stress and sources of capital. And I know -- congratulations on the KKR deal. But as you look down to your partners and your dealer network, could you just talk about the health or the environment there as it pertains to your excess in capital?

Yes. So one of the things I think we're very proud of Ben, is that we really believe we have the highest performing dealer network in the world. When I talk to dealers at our conferences, it often took them many years to qualify to be a SunPower dealer. So the reason I give you that background in context is that we're not on a dealer growth strategy to acquire as many dealers into our network as possible. We really have a process where we vet their ability to serve customers well, and as part of that process, we actually very much vet how well they're running their business and how strong their financials are. And then we have a number of things we do with each of our dealers ongoing, to ensure that we have proper limits on our credit and that none of our partners get too far out over their skis and they're able to run their business efficiently and effectively. So I'm pleased to say we really have had very, very few, even during my 2 years but even recently, dealers that have been in financial distress or have needed extra support or help. And that's a real credit to all the great entrepreneurs who are SunPower dealers, particularly our master dealers and the dealers as part of our Dealer Accelerator Program. These are some really terrific business leaders who run their businesses very well. As we look forward, thank you for talking about the KKR deal. We're quite excited to have raised over $1 billion over the past couple of months to be used as part of our loan program. And in my view, if you ever needed a quarter to see why we believe our strategy is a superior strategy, this was the quarter to see it. We don't have to raise debt on our corporate balance sheet to take on leases and loans on our own balance sheet, which has been a big, big benefit this quarter. This has been a challenging quarter, I would think, for anyone trying to raise capital for their own balance sheet. And with the banking crisis involved, we came out of that really in a very favorable position. What's interesting to me is that the market for raising capital for leases and loans is very strong. I would say in the setting we had where we chose KKR and then our earlier deal with HASI and Credit Agricole, we had strong interest from other credit providers around the world and strong interest from lots of different types of credit providers. So going forward, it's our intent to build a marketplace of partners and a marketplace of partners that's diverse and a marketplace of partners that increasingly allow us to lower our cost of capital and serve customers really well over time. But I can tell you, from the first quarter, I'm really pleased with the interest in both being our loan partners and then we said we're working on deals on the lease side. I think you'll see news from us on that within the next quarter or 2, but we're really pleased with our ability to get terrific partners on the lease side as well.

And just a follow-up. The Dealer Accelerator, you announced Wolf River, congratulations on that. Could you just talk about the framework and how you guys approach that with the amount of money that you put into the Dealer Accelerator Program? And then how you evaluate your investment into these partners? And maybe if you could give us any kind of guidance on how we can do that from the outside looking in.

Yes. Yes. Thank you, Ben. Sounds great, yes. So Wolf River, we're super excited about this -- the deal because this is the first Dealer Accelerator deal with a dealer who is a high-performing company completely outside the SunPower network. So as we've gotten the deal done and they move their business over to SunPower, they're 100% incremental for SunPower this year, which is just terrific and we're very happy to welcome them to the family. The same criteria I talked about before, we spend a lot of time on. If you talk to the Wolf River executive team, we meet with them in person, we go through their customer reviews, we ensure that they have a strong business financially and they have a strong leadership team. And really, our goal is to make a modest capital investment in their business to help them grow. So a company that starts in Minnesota but they really want to sort of own the Upper Midwest, if you will. They've got great growth in Iowa, great growth in Wisconsin, but you'll see them expand to all those adjacent states. And it's a little bit like Blue Raven and maybe at a much more efficient investment for us where it's a modest capital investment, 100% of their financial products and hardware products are exclusively with SunPower. We expect an ROI on our investment that's, let's say, under 3 years, most times they're under 2 years. And as part of the deal, we also take a small equity stake in that company and really deepen our partnership with them over time. So we're very pleased. We're very picky and the companies we work are also, frankly, very picky on who they want to work with. So we're just thrilled to work with Wolf River as we go forward. And we'll -- we're constantly on the look out across the U.S. for who are the highest performing, highest-quality installers in the U.S. and how do we potentially bring them into the SunPower family.

Your next question comes from the line of Tristan Richardson with Scotiabank.