SunPower Inc. (SPWR) Earnings Call Transcript & Summary

Hello. My name is Sioban Hickie, VP of Investor Relations, and I would like to welcome everyone to SunPower's Q1 2025 Earnings Call. A few housekeeping items before we get started today. [Operator Instructions] Please note, today's conference call 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 conference call, we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures can be found in the press release issued this morning. I'll now turn the call over to T.J. Rodgers, SunPower's Chairman and CEO.

Good morning. My name is T.J. Rodgers. I'm the CEO of SunPower. We've got the quarterly call, and I've got some added remarks that I actually delivered at the company. So let's get on with it. Okay. My computer is not advancing. Backward. Try to make it work and see what happens from here. Okay, I'm trying to get rid of that. Apologize. This is not okay. Did you guys give me a left-handed mouse? Can I just have a normal mouse? You're trying to help me by giving me a left-handed mouse so everything I do is backwards. You just turned it to left-handed mouse. I want a right-handed mouse that works. Okay. The title of SunPower reports Q1 '25, $80 million in revenue, $1.3 million in profit. That's a big news really. I'll talk later about the ad. I'll actually show it to you. The numbers are here. So we've got, as usual, GAAP and non-GAAP numbers. The numbers I'm focusing on here are Q1 '25 non-GAAP numbers. So this is a big news. We've got $1.27 million in profit, up from minus $5.9 million in the prior quarter. The GAAP numbers have bigger losses. Those are all related to the acquisition and the write-offs that we've had. We actually were profitable -- both profitable and cash flow positive in the quarter. That's a good financial news. I'll point out on the non-GAAP numbers. This is not what we reported last quarter. It was $81.1 million we reported. This is what we would have reported with the new 3 company revenue recognition rules. The reason I'm telling you that is the number was $81.1 million. This was not 47%. It was 36%. And on advice the lawyers, I put the new numbers in there because these are the "audited" numbers. They made our numbers better. And I don't want to report better numbers here today. Okay. This is our profit. Q3 is a truly unofficial number where I simply added the profitability of the 3 companies. The merger occurred right here. And then we lost $5.9 million in Q4 and made profit in Q1. So that is our curve. These are audited numbers. These are not. I'd like to congratulate our team. We broke the profit barrier starting here. 180 days later, bam, we've got profit. The rest of this report, that's really the financial news. We have a relatively simple company. The rest of the report, I'm going to talk about what went on, and I'm going to talk a little bit about our view of the future. Our $80 million was in line with expectations. We are currently an $80 million plus per quarter company in revenue. The next step is to move away from that. I'll talk about that later. SunPower, the new company, the new name is now properly and leanly staffed. So if you look at the head count history, if you go back to the third quarter of last year, the 3 combined companies had 3,500 employees. The first stop was post-merger day 1. We chopped down immediately to 1,341. One quarter post-merger, we were down to 1,140. I'm going to talk about these layoffs. So they're critical, how we do them and whether or not they hurt the company does matter. And today, we're down at 906. The target head count back here when -- after we merged was 1,225. The target head count here, including the beginning of this quarter was 980. And there's a reason for those targets I'll show you later. So the good news is, of course, if you're worried about money, this is a dramatic cost-cutting effort. The problem you've got is that you can't let it harm the company, and you have to balance those off against each other. Here's how we do that. This is a memo just in our standard format. We haven't changed our logos yet. And this is a thing called the requisition auction. It's a process I used back in the semiconductor industry to maintain the right head count, a very tough industry for maintaining profitability. On Page 1, it says how many people we had at the beginning of the week who left, who wants to come in and what's our ending head count. So in this particular case, we actually added people very rare, obviously, given that curve and ended up with 907. So this was the third day of work week 17. Then, down here is a summary of costs. So if you add and subtract the dollars associated with the bodies, it says quarter-to-date we've saved an annualized $1.6 million. So this is how we track money and get to having profit so quickly. We watch it 3 times a week. Now this is a very disciplined process. Forget the box for a minute. This is the total company head count. It says we've gone down over time. These numbers are the actual head count, and it says our current target is actually lower yet, it's 881 people. So this is for work week 13, 14, 15, 16, 17. So this is something you look at a couple of times a week to make sure it's on track, and you can see it is. The total company head count is then divided into 6 parts. There are 2 divisions. I believe in having profit and loss divisions that control the company. So my function in the company is more like that of a middling Director than it is CEO. I am obviously into a lot of details, but these division managers, they make our revenue and they're responsible for making our profit. Then we have the overhead functions. And you can see each of them has a trajectory. So you can see, for example, administration is below its target. IT is at its target. Finance is getting to its target. This we had -- because we had a quarter closed with 3 companies, a huge amount of work. And quality and engineering I've got together, one VP running both. We have to have 2 hats in a company like this in order to make ends meet. That is the name of the game of Solar, and that's a challenge for me as a manager. Okay. This is data. We have a set of consultants. They're called Ayana, A-y-a-n-a. They're a spun out of McKinsey. They are excellent consultants. I've used them, for example, in the Enphase turnaround. And they come in and give you a bunch of numbers like this. I'll give you one number. It says, for example, in HR, how many people should you have per HR employee? And then you have data for the median and the top quartile this is for a couple of hundred high-tech companies. So the answer is, that's a bad number. It's median. That's a good number. It's 75th percentile, and that's a ratio. So you have those ratios per million dollars of revenue, et cetera. And that's how we get the lines for these groups, and that's how we drive them, point one. And point 2, they're small and they have to be small. These guys are judged on revenue per employee now. They're judged on the bottom line because their bottom line is my bottom line. But the overall metric I'm looking at here is revenue per employee. So the company right now is at $369,000 per employee per year. That's a good number, especially for Solar. If you go check some other companies, I won't name them, but all you have to do is look at their head count and the revenue from the last quarter times 4, and you'll see numbers as low as $200,000, and that's going out of business plan as I see it. And then the weighted average pretty much of our 2 divisions is what the company is. This is our classic Solar division, which is the Blue Raven embedded start-up that we have and the New Homes. This is a separate division which doesn't sell to people, it sells to corporations that make housing developments. And therefore, it's got a lot lower head count because, for example, we have a very large sales force here and less than 10 here. And that's why their targets are different. The businesses are really different. Okay. So the point here is we track this 3 days a week, Monday, Wednesday and Friday, 8:00 a.m. And I'm involved, and it's what drove the curve and drove the profitability along course with accomplishment of making revenue. This is a disciplined thing. I don't know start-ups, and I don't know any solar companies that run tightly. This comes from the semiconductor industry. Here's the discipline right here. Director of HR, he does this report. He does it to the specification, and it's always there and it always works, unlike my mouse today. More to come on that. I'm not going to tell you his name because the vultures would be all over him. And your first reaction is the Director of HR, the guy is 19 years old. And no, he's not 19 years old. He's a full 25 years old. And he's very confident and he is representative of the kind of employees we have in Salt Lake. They work hard. They're young and they're -- and Salt Lake is the center of the world for solar. If you go look at where the solar companies are located by head count. So, that's there. Salt Lake is the Silicon Valley of solar. I was going to show you the rec auction spec. But when I was timing this thing earlier today, I decided not to go over it. But all those graphs you saw come from a spec that I have, a spec that I wrote years ago and updated 10 times, and it tells us how to run that. And I have transferred approximately 10 business processes, not all the ones, but approximately 10 business processes to the new company and done training. So what you just saw is one little module. Now you can -- I'd say we have discipline. And my joke was going to be, here's a picture of my staff meeting last Wednesday. But we do have discipline. And I didn't have it when I came in. Just back story here, this guy right here, his name is Lee Ermey. The movie is Full Metal Jacket. It's one of the 4 movies that defined Vietnam, Stanley Kubrick classic. And the story on this guy is they brought him in as a coach to coach the actor who was playing the Gunnery Sergeant, check perfection of the tie and fleets and the shirt and the whole thing. Guy who played the Gunnery Sergeant, how to be that. And then Stanley Kubrick, 2001 space Odyssey a genius, said, "Fire the actor. He's my Gunnery Sergeant." So this is a real honestly Gunnery Sergeant. If you ever watch the scene, it's a classic and it's a classic of the drill sergeant who's hated by the recruits right up until the time they get warned and all a sudden, he looks a whole lot better than he did. The first movie that -- this was Sands of Iwo Jima starring John Wayne, and he was Sergeant Stryker. Same story. This guy is the best of all of them. Okay. Another thing I've transferred is to make the point of the dichotomy of having to do 2 opposite things at the same time. That's always been true. This is a memo I wrote in 1987 and rewrote 4 times up to 2013. And the title of the memo, and this is one of my specs, internal specs that I've transferred. So this document exists in our system. It says "10 things to do when a valued employee quits." And -- so here's -- it goes -- this is the first 3 steps on Page 1. It goes on for 5 pages and defines a process. So at the very same time, we're going down a roller coaster for head count. We have executives working on keeping key people. Just read one thing. "React immediately within 5 minutes. There is nothing more important than to react immediately to an employee as quick. I repeat, there is nothing that takes priority over working with employee who has resigned, presuming you want to keep them." Then just in case you didn't get it, I say the phrase "Nothing more important" means that your action should happen immediately. The next activity you have scheduled should be canceled. Any delay such as "I'll talk to you after our staff meeting" is unacceptable. And I finally got this one across onetime when I canceled my own staff meeting because we had an engineer -- that was a really good guy. And I walked out and said, I got to do -- So anyway, this is a process for keeping people. We have a process for evaluating people I didn't show you to save time. Key new employees. We are now able to recycle a fraction of the salaries. I showed you savings this quarter today is $1 million and obviously save tens of millions on those curves. We now recycle a fraction of salaries save from head count reductions, bringing key industry players. So at the very same time you're cutting, you're hiring and you're hiring people using the money with people that left, and that's a rolling process, happens, like I said, 3 times a week, and you're building it up. So last week, we kind of hit the jackpot. We had 2 great hires, and I brought those guys in to meet you today. And actually, I've got their bios here. The guy sitting next to me used to look like that. That's -- his name is Dick Swanson. That's me in 1972. And this is what a conference room looked like before whiteboards. This guy became the Head of the Electrical Engineering Department at Stanford. We all worked in the Stanford Integrated Circuits Lab, which at that time put out more papers per capita than [ Japan ], [indiscernible], Fujitsu all of them. This was the center of Silicon Valley in the Stanford campus. This is why he looks now, actually weathered pretty well. He gave me his resume. He wrote this. I asked for a short resume. I'll make 3 points. He's the Co-Founder, President and CTO of SunPower Corporation. He was -- after that, he was -- and during that time overlapping as Assistant and Associate Professor of Electrical Engineering at Stanford, so he taught students. And in our world, like the National Academy of Sciences and the National Academy of Engineering, that's sort of the Oscar world. He's a member of that. So I called him up this morning, and I said, "Dick, I'm going to introduce you today." And we don't have a title. It's a 1-year contract to help us out for obvious things. "We don't have a title. So what do you want to be called?" And he didn't how -- And he said, "Well, I'll be a technology consultant." And I said, "I love it." It gives me a chance to make a point that you [ got ]. The solar industry is saturated with title-hungry people, Chief Revenue Officer, Chief this, Chief that. And here's the guy that really is the Chief and he's a "technology consultant." So I'll use this as a moral lesson inside the company. So right now, I'd like to introduce Dick Swanson to you, and he's got a few words to say.

Thank you, T.J. Well, today, we're at a pivotal moment in the renewable revolution. About 1.5 years ago, we surpassed a terawatt of installed PV capacity globally. And as we speak right now, we're bumping up to 2 terawatts of global PV capacity. To give you some idea of the magnitude of this, the entire U.S. electrical generation capacity is 1 terawatt. We're going to be very soon producing 1 terawatt per year of photovoltaics. And the reason for this is simply that PV has become the lowest cost form of electrical energy. So this is sort of a transition point in our industry, the way I see it. We are entering a new phase where the question is, okay, we've done this, what now? How do we take our energy supply from sub 5% of the global generation to the dominant source generation. How do we do that? And -- so this is a whole new phase in our industry, and I'm really excited about the opportunity to come and help Cypress make that transition and use my 50 years of experience in the industry to work with them on the complex supply chain and technology landscape that we're facing and look forward to great results here. So thank you, T.J., for inviting me.

So he slipped and said the word Cypress, and I'll tell you why.

Oh my God.

It will be obvious why that is. Okay. Next, Mehran Sedigh. He comes in as the Executive Vice President of Storage Systems division. So storage system is not a battery. It's a system that has batteries in it, among other things. And our Chief Technology Officer. He's a PhD in chemical engineering from USC. He just came out of Enphase, where I would point out that he's built a $500 million storage business at Enphase, and he's connected very well with Enphase. Dick said something that's true, but other people would argue with it. It's true that if you look at the -- take the cost per kilowatt hour from solar, it's the cheapest, like $0.02. Nuclear is $0.06, gas is $0.06 or $0.08. But you've got this little problem. Sun only shines on an average [ brightly ] 5 hours of the day. So you got to work on that one, that's called batteries, but -- and that's what this guy did. So if you -- today -- what you have to do today and what's going to change the world is during the day, you're going to have what's called a "grid connected battery." Your solar system will be bigger than the consumption of your house and then you'll store that up. And then at 7:00 p.m. at night when the local utility start screwing you for $0.30, $0.40, $0.50 a kilowatt hour, you'll run off your battery. So in effect, it's like a bulldozer, you scoop up power during the day and dump it back into your house at night. And the battery will become the most important ROI component of putting in solar. So we need a real battery guy, and that's Mehran, and he's going to run a system where we're going to create system-level storage products, not just sell somebody else's batteries. Mehran?

Thank you, T.J. Good morning, everybody. Really excited to be joining SunPower. This is really important junction. SunPower, if you go back to the days that they started and T.J. helped push the company forward. It has its roots in innovation. And this is where we are going to go back to really both in products as well as services. T.J. talked about me coming from Enphase. I spent 6 years there developing 3 generation of energy systems, not just a battery. It is true battery. It's, of course, essential part of any energy management system, but it's not sufficient. Electrification is pushing homes forward more and more to consuming more energy, electricity. AI is coming to the future in everything we do. It is going to put more pressure on the grid and having an independent energy source, which is sun on our roof is no longer a nice -- It's a necessity. And using that requires a sophisticated software development, sophisticated AI-enabled algorithm to manage all that, manage interaction with the grid, making sure the homeowner is taking care of financially with ROI and using the cheapest source of energy available. So I'm excited to start coming in, contributing to that process forward with SunPower and having some fun along the way.

We are. My recruitment for these guys was all technical. You guys come in, we get to make changes that will change the world. And that's really the message I'm going to give you for our mission going forward. Okay. Other stuff. And we formed a strategic partnership with a company you haven't heard of called Sunder. If you lived in Salt Lake City, you would know exactly who they are. They're big, highly regarded in their sales front. So we now have them supporting our growth. They have more salespeople, by the way, than we have employees, just to scale it for you. They're now supporting our growth, and that will be orders coming in now that will show up in the third quarter. Next point. We strengthened our Board with 3 public company ex-CEO Directors, that is directors who ran companies. Lothar Maier, former CEO of Linear Technology, a $1.4 billion chip company. Dan McCranie, who's right here, can we give a picture of him, please? There he is. He came over. Dan, he's the former Chairman of 5 high-tech companies, including Freescale and ON, the 2 halves of Motorola when Motorola spun out their halves and became -- and broke up into 2 public companies. And then Jamie Haenggi. She lives in Wichita, and she's the former CEO of ADT Solar. So we've got -- we're strengthening our Board, and I'll talk about the statistics in a minute. Okay. When we first went from being a start-up to being a public company, we had a start-up Board, and you don't follow the independence rules, you get the best person you can. Now we have independence rules. That is, for example, the people -- person who interfaces with the public. It can't be me because I'm an employee. I'm not independent, and you have to have an Independent Director for that. So in that case, we've got Ron Pasek, who is the Chairman of our Audit Committee, and he's now the Lead Director, and he's the man that interfaces with the public. I'm Chairman, but he's the guy that talks to the public. And secondly, in the comp committee, we've got a guy who used to run Complete Solar. So he's not independent, won't be for 5 years. And he's been replaced by Dan McCranie that I just met. And Dan has been on the Board of way bigger, more complex companies than ours. So the 2 points I'm making here of our 11 directors, we have a relatively large Board. We have 8 with CEO experience, and we have 7 who are independent. So we now have a very strong Board going forward. Last point in the primary presentation. I talked about our -- I won't say it again, but I talked about our economics and everybody is worried about the market right now, market price. And the best we can say is we haven't been damaged as bad as the other guys. So here I've taken 3, 4 important companies. This is Complete Solar. These are stock graphs. And if I summarize those graphs for year-to-date performance up to 4/27 when the snapshot was made, we're a little bit ahead of even and the industry is in the tank. So we feel that we're being recognized for what we're doing financially. Okay. A few things, all hands meeting. So I go to Salt Lake. I go into a big room in the basement. Between that and the people watching, we have 1,000 people, 906. We have an all hands meeting. And by the way, the all hands meeting -- let's just say I was considered an alien from Silicon Valley for a while, and I'll talk about that in a minute. Okay. First thing we talked about was SunPower rebranding. Part of the company comes from a start-up called Blue Raven. They're very proud of their company and the concept of getting renamed was something I had to sell to them. So that -- I'm going to also talk about that because this is the first meeting we've had since we rebranded to SunPower. There's our logo. I'll explain that in a minute. First of all, SunPower, this is a list of 70 -- the second half of the list of 70 companies that were solar and went bankrupt. And many of them were private sales companies, but some of them, SunPower being the biggest, were big real companies that really did go bankrupt. So my first point is we have to do everything, including those layoffs you hate, in order to keep solid financials because you don't have that, you don't have anything. And they bought into that. Second point here is that acquiring solar companies to grow rapidly. Now that in the solar business in semiconductors -- when I ran Cypress, I was there for 34 years, we acquired 26 companies. So if you acquire a company, you acquire designs, you acquire people that designed it, you acquire the marketing people. They all come to a new place. Their products are there and an acquisition just sticks. Solar is not like that. The solar sales forces are mobile. And if you bring them in and piss them off, then they go away and don't come back. So we will acquire with trepidation, and we will have all kinds of golden handcuffs on the people that we acquire. That's my only point. Okay. Going back in time, saving SunPower. San Francisco Chronicle. SunPower had a great idea and strategy, but cash was running short until it received a $750,000 person check from someone who saw the light. I think that's the only thing that San Francisco Chronicle ever wrote about me that was favorable. And here we are on top of Cypress. Cypress was -- this is, I think, like 2002. And we just to put on a roof, British Petroleum panels. And Dick and I went on the roof, we were doing some sort of promotion. CEOs of the 2 companies. That is Silicon Valley and that's San Francisco Bay. Okay. SunPower's reason for being wasn't we have the best sales force in the world. It was we have the best panels in the world. Ours were smaller and higher power. These were half panels that I could get into one picture. But you got a smaller panel, it's pretty, it's all black, and it's more wattage than the competing panel. So that's what SunPower sold, technology. And although I'll admit sales is dominant in this industry today, technology still matters. Hence, the techie guys that we didn't have that we took a few percent of our savings from the overstaffing in the company and recycle it into building a technology team, and these guys will both work on that. This is an old slide that was made in 2009. And Cypress still owned SunPower at that time. We built an automatic line for them to make solar panels, and they got $79 million in 2005, made a profit, we took them public. We Cypress took them public, and I was the Chairman. Then they grew a factor of [ 18 ]. The guy that did that was Tom Werner. Also, I worked with Tom, and they went up to $1 billion. So this rocket ride made SunPower the predominant company in the world. At that time, our investors, we own 40% of the economics, but they were 10 vote shares. So we own control and 40% of the economics. Our investors were raising hell, but they didn't give a damn about our little semiconductor company. They wanted direct access to the solar stock. So we spun it out, and that was a onetime stock dividend worth $2.6 billion at the time we did it, putting the value of SunPower at that time to $6 billion. Two years later, the French went in the market, the oil company, Total, BigBox, and they bought 60% of the stock of the company in the open market. We all enjoyed the share price ride, but they took it over, and it was no longer a Silicon Valley company, which is unique in the way it works. You don't go -- you don't only have your Board meetings in Paris. I'll just let you know that one doesn't work. So that's when I left. Okay. So the point is, this is old SunPower after it was "saved" back here. That's where we are right now. Now let me tell you what I didn't say explicitly. I did not say our next step is [ 774 ], and you can write it down, divide it by 4, and that's the next quarter. I'm talking about our vision for the future. And all I'm saying is if you measure our vision of a prior company in a different era, we're moving along, and we're not done. That's all I said. The SunPower brand is hugely valuable. And I'll make that point with this graph. This is a company called EnergySage or East Coast company, and they quote solar deals, and they quote what are called long-tail solar deals. So this is to the homeowner, full retail. And in this case, they have a graph of price difference from the least expensive equipment carrying. So here, the least expensive equipment is Tesla. They brought out a new battery and it's cheap. And then REC is a high-volume manufacturer and there -- they make great panels, fortunately not in China, and we use their panels right now. Okay. So this is 0% to the cheapest, and that's the lowest cost option. And we may have -- we have to be lean enough to compete there. But I'll fire the marketing guy who competes there. Simple. Okay. Now you go along and you see there are the guys that sell volume at whatever price is required, then there's a group of companies that have some sort of advantage and they have a premium. In this case, the First Advantage company or group of companies uses Enphase inverters, not Tesla. And there's a reason for that. And then REC panels. Then you go up and there's this tier 20% to 30% premium. Then you go up here and you go, who the hell are those guys? And the answer is -- and this, by the way, is last August, the asterisk down here, SunPower filed for bankruptcy in August 5, 2024. So we expect this to be the last report, including its products. But you'd walk in and say, I'm SunPower. What kind of panels do you have? Who are you? From India. Who are they? What kind of inverter do you have? We have our own proprietary inverter. I know about that because I'm replacing them right now with Enphase inverters, so the thing works right. So SunPower name even with a lacklustre product line was 50%. And that's what I want to get back. And we don't have good marketing. And we're going to have -- in one of these meetings coming up, I'm going to introduce a marketing star and say how we're going to go forward. Right now, me griping about reading reports and griping about price is "marketing". Okay. Now to get back to where SunPower used to be, I want to replace -- I want to bring back that technology edge, hence the guys you just met. So we're going to partner with REC on panels. We already have. We already use their panels. And when the SunPower inverters go away, we're going to partner -- our partnering with Enphase. So we use only Enphase inverters right now. One good thing about being the CEOs, we now have a bomb spec, AVL list, and I have to sign it. So that's what's on it, among other things. So that's where we're headed back to having a technology advantage so our sales people can talk why you want this one. And only if you say, "I can't afford it", then they'll say, "Well, we've got one you can afford." Okay. The vision. This is one of my favorite pictures ever. It's a real airplane. It was made by NASA through a contractor. It had 65,000 solar cells on it, producing 35,000 watts. And it had electric motors on it, 2-horsepower electric motors, 1,500-watt motors. You can see these propellers, they look like windmills because they are. Because at 96,800 feet, there's no air. So you need a giant propeller to grab enough air to cause something to fly. And this airplane took off under its own power, flew to 96,000 feet, maintained it. And that's a world record that still stands today, and it was done in 2001. And to me, I'm not going in the airplane business. I wish I could. We sold these for $200 a watt. Today, it's $0.31 a watt. But -- I'm not going in the airplane business, but this is an image of what can happen with solar, with technology and a vision as opposed to selling solar cells in the neighborhood. Okay. I thought about that. This is my kitchen. I was working on this, actually the report I'm giving right now. And I mocked up an old copy of the Wall Street Journal with an ad telling what I'm going to tell you right now. And this is the text of it. I'm also the IR guy in case you haven't figured that out. And my wife and our 2-person venture company is the -- helps with this. So that became this. This is the actual back page -- full back page ad of the Wall Street Journal yesterday. Normally, I would never do such an extravagance, but I figured this change, the branding of SunPower, the new direction, warranted it. So I already told you about that airplane. By the way, 96,000 feet is 30,000 feet above that. That's F-15 Eagle. In my mind, with 104 to 0 kill ratio, it's hottest fighter plane it's ever been made anywhere. The interesting thing is it's really an interceptor, not a fighter. What that means is when the bad guys come over the border, this thing needs to get to fighting altitude about 30,000 feet fast. So they made it with an engine. It has 1.17 times the thrust of the weight of the airplane. Therefore, it can go vertically. And this airplane can take off, and they're actually -- you can go on the website, not our website, but you can go on the internet and get pictures of a guy taking off and going to 30,000 feet ready to fight. The record from going from ground to 30,000 feet is 56 seconds held by that airplane. So -- but it won't fly high. It won't -- it's not stable high. It's a missile when it gets up there. It's not aerodynamic. Then of course, there's the airplane of all airplanes, the SR-71 Blackbird. This airplane flew over the nuclear missile silos of Russia for 2 decades, and they never had a problem. The Russians invented a plane called the MiG-25 Foxbat. It was 1,800-mile an hour airplane, and they couldn't touch it. They actually invented that airplane and long-range missiles so they could take off when they saw the Blackbird coming, get up, get to their highest altitude, then fire a missile to go the rest of the world. Never happened. The same travels twice the speed of a gear hunting rifle. And all the guy has to do is turn 2 degrees to 1. And by the time the missile gets there, he's 20 miles away out of radar lock. In July 1976, this airplane set records for speed, 2,193 miles per hour and altitude 85,069. Air breathing airplane taking off under its own power, not a rocket. That is the record this -- By the way, a little fact to add I really like. Everybody knows that in Denver, you have to boil an egg longer in order to get it cooked. And that's because the boiling point of water reduces as the pressure holding the water down reduces. So at 85,000 feet, water boils at 59 degrees Fahrenheit. Said another way, your body temperature is above the boiling point of your blood. So that's another way it's not good to be up there. And these guys can't just wear an oxygen mask. They actually have to have a full pressure suit and fly that airplane and they would fly for 10 hours at a time over the Soviet Union with the Soviets trying their latest little whizbang take them out, never happened. So this is a statement. I've already gone through it. I won't do it again. There's 3 companies that have combined, old SunPower New Homes, Complete Solar and Blue Raven Solar. Complete Solar is my old company. By far, the smallest, we brought 65 people into the 900-person company. I showed you the profit trajectory. I talked about forecast for revenue. And then I pointed out, I was the Chairman of SunPower. And hence, I have a emotional stake in this. We're now on NASDAQ. We now an SPRW, our warrants. And that's our website, and that's our new logo. I'm, in case you haven't figured it out, former stamp -- I'm a stamp collector. And -- so I turned this logo into a commemorate to stamp. Okay. Next thing, customers. If you don't treat your customers well, you'll get blown up. And solars, if you've been reading the news lately, some of our competitors are getting famous for not doing well by customers. One thing I learned in my industry is you took care of your customers and working on quality and customers was 1/3 of my job at the end of my career at Cypress. Okay. You recognize this guy. He has a house in Nevada. They had "A 3-year delay due to quality issues, including a roof leak communication breakdowns, meaning the panels didn't talk to the IoT, legal escalations, et cetera, et cetera, et cetera. So these guys decided they were going to -- this is in Salt Lake, and this is in our boardroom in Salt Lake. They decided they were going to fix it, and they did. And so you can see it barely there. She had -- her dad signed this jersey, and it now hangs in the hall of fame. And whenever you do something good for a customer, your name goes up. Customer escalations. This is a -- We keep a lot of data. This is one graph, but number of customer escalations is down. And guess what, I answer my phone. I read my e-mail. People know how to get to me. And when -- if you screw a customer, you're screwing me and I don't tolerate that. And everybody knows that now. Hence, you can see, we're treating them. We always did. Blue Raven in particular, has always had a high 4-star rating, so did SunPower. So the culture is there to begin with. I'm not fighting against the culture. But now we're taking it beyond the right thing to do -- to fetish. I learned this from another guy. That's Jerry Sanders. [indiscernible] Jerry, Advanced Micro Devices, still lives in L.A. The only difference now is the silver mains are now shoulder length. And I see him every now and then. And he was the salesman. He had a BSEE, but he was a sales guy out of Fairchild, and he was the advocate for the customer. And if you screwed one of his customers, the wrath of hell would come down on you. And -- so anyway, what the story I just told you about us, that's what I learned when I worked at AMD, I was there for 3 years. One example, homeowner escalation. This came into my e-mail. It turns out she had already talked to KCVS reporter in New York. And so it was all set up to be the bad guy to screw the customer and all that. We fixed it. "I just wanted to close the loop here. The techie facilitated -- that came to our house in New Jersey was able to fix our battery issues. There was a laundry list of errors that they showed us, but the [indiscernible] engineer that you line up for us, et cetera, et cetera." Down here, this is a slide again from our company meeting and the heroes, they all go on the hall of fame. One more. "Thank you for reading my e-mails and helping me get the 2 appointments needed to deal with my broken string inverter." I won't tell you that Tesla has a string inverter, and we don't. We have a microinverter. Our inverters optimize one panel at a time for maximum power, whereas the string inverter ties, let's say, 10 panels together and can't optimize all 10 because they're different a little bit from each other. Plus 10 panels at 50 volts each is 500 volts DC, not something you want around your house. String inverters are yesterday's news, and that's why we powered with Enphase -- excuse me, partnered with Enphase. All right. This is the last section of -- I want to just give you a flavor for the culture of the company. So then I ask for questions. And the questions have been very problematic for me. The first meeting I went to, the questions were passive aggressive insulting. Now that we have to put up with you, question, kind of things. And in my last meeting, I showed this slide. As you might gather, I am a movie buff and this is a scene in front of the Frankenstein Castle from the 1931 movie. And I told them -- I showed them this picture and I said, "That's kind of how I felt when I was looking out into the crowd last quarter when I came here for the meeting." And they laughed a little bit. And then we decided to try to make -- deescalate the question session because they're asking questions, what are you doing here? What are you doing there? Why are you doing this? And obviously, the place is getting cut, so they have valid objections. It's not like they're just being hard to deal with. So then I made -- so this last time, I took this step -- one step further, and I turned the question and answer into a game show. So I started by showing this slide. That's me you see standing in front of the crowd. And then the game is a quiz game, "Let's play poke the monster." And I had a guy with a voice like a game show guy, "And now let's play poke the monster." And then I gave a score for it. If the monster crowns, growls, lunges, loses his neck or has his head explode, then you get a certain number of points. And we had fun at that. And I had 2 questions to start out. This may make your head explode, but, and then there was a question. And it was it. We're starting to be able to work together is my point. This -- they have core values. I haven't talked about core values here. It's a big part of management. We have core values. I'm working on them myself. Every week I work on them. But they had core values. And one thing I really like, I walk into a building, it's in Oram, Utah, and on the wall, there's core values. And I was going to debunk them and then I read them, and they were really good. So I just read their own core values to them. Hard to gripe about changing your core values when you're espousing following your core values. Produce results that are worth more than the cost to deliver. That's called make a profit. Obsessively reduce cycle times in every area. That's get the stuff on the roof and make it work. Keep the sales and field experience simple, even if it means adding complexity elsewhere. And the last one, stay lean, eliminate unnecessary cost. With 10% of the unnecessary costs we had and eliminated, we've now got the seeds of 2 groups that will change our company. And we pay them. This is a bonus. We actually paid them with $100 bills. It was called 10 bins. We prepaid the taxes. So the 10 bins were yours. We actually went to the bank, got the money and gave it out to the people. So they walked out. I learned this -- Intel Livermore did a weaker version of this 20 years ago. I did this as Cypress paying cash. And there's something about cash. You look at it, especially the new dollars that are high tech, for copying reasons, and it has an impact on your head. And you have 10 of those in your hand and you go, "I did something last quarter, it's valuable." And that is different. And it turns out that's the lesson I learned from this guy. I knew him when he was alive. He was a professor at Hoover, at Stanford. He allowed me to call him to get advice, which I did. I've been in his house. And I once asked him, I said, "Did you ever do -- you and me are Adam Smith of my day. "Did you ever do anything you weren't happy with?" And he said, "Yes." And then he told me the story, and you can find it actually, it's well documented. Just before World War II, we realized we'd have to spend half the wealth of our country, half of our gross domestic product to fight that war. And he was part of the team that figured out how to get Americans to pay because in those days, you paid your -- didn't pay your taxes until March 15th. March 15th you filled out the form and mail the check. And he knew that Americans would not write a check equal to half the yearly wage in order to -- even for a war, even if it was adjusting the war. So he invented withholding tax. He and his team invented the fact that corporations became the tax collectors for the United States of America and that money disappeared from your check before you got your check. And in that way, you never had it. You looked at your payment from the company as a payment that you got after taxes. So if you want to make a bonus, not matter, give it to them in their check, which is auto deposited anyway, have it be some line in the check bonus and then don't make a big deal out of it. But if you want the bonus to go directly into their head, I did something good and I got paid for it, give a handful of money and pay their taxes upfront, that's yours. And again, Intel did that with one $100 bill in their Livermore plan. So anyway, that's the lesson I learned from this guy. That's it. That's our vision. We're now SunPower. Questions?

A few instructions before we begin Q&A. [Operator Instructions] Our first call this morning is from Derek Soderberg from Cantor Fitzgerald.

Congrats on the financial results here. Just continuing on your vision, T.J. You've already gotten the business to a strong margin profile. You lowered sales commissions significantly. But on the revenue side, how do you see the SunPower story playing out over the next year or so just to really set up the business to become a $1 billion annualized revenue company? Is that going to be through acquisition, through partnerships, organically? Can you provide some color on that vision and reaching that $1 billion annualized level?

I'm glad you didn't ask me when are you going to hit the $770 million you showed on the slide. Our target is $1 billion. That is the vision. It is obviously achievable. What that slide shows is whenever you're in a meeting, somebody says, "We can't do that, how can we do that?" It's obvious it can be done. And in a day when the solar market was 10 times smaller than it is -- even more than 10 times smaller than it is today. So it's obvious it can get done. First thing you have to have a stability. Now we stabilized at $80 million a quarter. Okay. We have a direct sales force that -- so we sell directly to our customers. We have people that knock on doors, and we have people in telephone banks. So that effort can grow. And that's the $80 million per quarter growing at some reasonable rate. And I won't even speculate what it is, but it's a number that would take a while to get to $100 million. Okay. Two, inorganic growth. Based on my career, I'm a fan of inorganic growth. And those new companies, by the way, they come in. There's stuff they do better than you do. There's a mixture of managers. You have merit wins in terms of picking the management team of the combined company. So I'm a big fan of that. It's very positive, and we will do that. But you got the caveat I said that the sticking factor in the solar industry is way lower than the sticking factor in the semiconductor industry. So I have a plan for that. Part of it -- oh, thank you. Stock. So I want to tell shareholders who are on here, we have our -- in May, we have our company meeting coming up. That jump from $5.5 million the last quarter of my old company to $80 million came because we got SunPower. We added 1,000 SunPower people to 65 Complete Solar people. Those SunPower people got letters saying you're going to get a stock option. Now there's a 1-year cliff vesting on that. So they're in their nonvesting period, but I need approval in the company meeting -- excuse me, in the shareholder meeting for that stock. And I won't go into other details, but you guys need to give me the stock, I need to grow the company. And that's part of it. They don't think about -- like Silicon Valley. I'm an owner of the company. I have a piece of the company. The stock is going to go up. My weekly -- my rent is going to get paid by my salary, but my new house is going to get bought by my stock. And that mindset is going to take a while. It's already started. I've had people tell me, "Yes, you keep your stock, give me a race." Multiple times in the last company meeting, the guy raised his hand and said, "So how do we sell stock?" I said, "We announced it, you weren't listening. Fidelity, we have the Fidelity service, which all Silicon Valley companies use as the best one. You have an account in there, you have stock in your account." So it will be partly on stock. The other thing is it will be vesting of anything we pay. So one is I won't -- I'm unlikely to go with the company where the owner owns everything. And there are -- a lot of the small solar companies are that way. A couple of entrepreneurs start a company, they own 99% of the stock. Everybody else works for salary, hence, "Give me money, not stock", mentality. And the consideration we give in an acquisition will be partly cash and partly stock. The stock will pay off big for the guys that come, but there will also be cash. And we're going to revest that. The deal will be, "No, you don't get x dollars at the signing, you get that over a 1 or 2-year period." So using vesting of the consideration for an acquisition plus significant stock options that they're not used to. That's my theory about how to get and hold people. And once you're on that role, you're profitable, people can see it, they can believe it once you're on that role. That will be a very powerful dynamic in a nonstock economy, which is a solar economy for us. So that will be a winner. That's how Silicon Valley -- That's why we are who we are.

Go ahead, sir.

Can I get a follow-up? Just T.J., I wanted to quickly touch on the battery systems commentary. You mentioned the importance of that to the ROI and that you're going to create your own battery systems, not just sell somebody else's battery. Can you talk about that a bit? Are you going to build the batteries? You've got experience with Enovix and SunPower. How should we think about that opportunity in batteries for the company?

Thank you for asking that question. I can visualize people pushing the cell button right now. T.J. is going in the battery industry. No. Our batteries are made by Enphase. And it turns out, if you think about the philosophy of the Enphase battery, take a panel, put on an inverter. It's a box that looks like an old-fashioned VHS tape. DC comes in from the panel, let's say, 10 amps at 40 volts, 400 watts, goes into the inverter. The inverter has a completely digital system that converts the DC to AC. And it's not a simple electrical engineering thing. The chip that controls that is 4 million [ gates ] with 2 high-performance computers on it. And then that talks to the grid and after 9 -- or 8 revisions were on after the [ IQ 8 ], everything the grid can do to screw you, and PG&E, Pacific Gas & Electric, specializes in finding new ways to screw up solar systems, is bulletproof. Okay. So you take that box, and let's say that box right now can be a kilowatt. And then you put a battery on it. And the inverter looks out and says, "I see 40 volts. I'll do what I always do. I'll turn it into power. I'll take all the learning I have turning it into power and make it work right." So Enphase batteries are batteries -- lithium-ion batteries, driving through Enphase inverters and connecting to the grid. And that's the hard part. And that's why Enphase inverters are double the price of the [ next one ] because it really truly systems. So now you think about what does the system look like in the Enphase world, and that is you've got the same box, millions of them. They make like $5 million a quarter, very low cost, talking to the grid and then you hook stuff onto it. So you hook a battery onto it, you hook solar panels on to it. What we're going to do is take that product and we're going to write software for the computer to make that product, do special things. Enphase is already doing that. We'll feature a lot of their products. For example, Enphase now has a plug that charges your electric car and the box to charge it. Okay. You now can go in your Enphase, you can get the Enphase app, and you can see what the output was from sunrise to the time you're looking at it for every panel one by one on your house. That same application now, you can tell it more sophisticated things. "I want you to charge my car. I want you to charge my car only with solar electrons. I don't want to use grid current that would burn oil to charge my car. I want to use only solar electrons." And then it will do that. And that's trivial. That's not a trivial problem, right? Sun -- Cloud goes over the sun. It's a foggy day. Your car needs a certain amount of charging, and you have to have intelligence between the source of power and the use of power. So that's what we're going to build. We're going to use products from people to build that stuff and make it rugged bulletproof and cheap and bring up products where our customers see an end product like that. We're not going to make the components. You don't want to make batteries. And the batteries -- I'm in a battery company right here at Enovix. They make high-tech batteries. The batteries used in cars and homes are 10 times cheaper than a high-tech battery. I don't want to do that.

Our next question comes from the web. How realistic is further inorganic growth? And how is the current opportunity set for acquisitions of distressed assets of companies such as Sunnova?

Well, I don't know about Sunnova. That was a major crash. There's a huge amount of money in it, and they may or may not ever sell assets. If they do, albeit they're bidding, if the assets are priced right. But I gave you a list of 70 companies. So the answer right now is you want some stock and a job and a good salary and work in a company that is going to grow, we can accommodate that. And so right now, it's -- for those of us capable of growing, it's a great market.

On that note, you actually have a question from the web asking about employment opportunities. How open are you to accepting applications from former SunPower employees?

Well, when these guys ran SunPower, it was a well-run company in the king of the world. For the last 3 or so years, it wasn't well run. And when I came in there, I found a pretty sick management structure. expensive, aloof, not detail oriented. Having said that, SunPower is -- got thousands of really good people in it. People you couldn't get anywhere else. People who came for the vision back when it was what it was. So the answer is if you know solar, if you're smart, you want to work hard and win, send a resume, [email protected], Rodgers got a D in it.

The next question is from [ Kashi Gazack ] who asks, if you have any comments on the TCL SunPower panels and potential panel partnerships?

In the same way I talk about batteries, which the Chinese have driven to prices -- even Chinese companies go -- you understand they've got companies going out of business, too. So when the prices are so bad, Chinese companies go out of business. You don't want to start trying to make them in California. So on panels, it's the same thing. They've driven the price of panels. When I left SunPower, the price of panels was $2 a watt. It's now $0.31 a watt, and they'll deliver it to your door for you like milk. And if you want to take the risk of buying the panels and importing them through our customs, which you'd really be dumb to do, their pricing is down [ $0.10 ] a watt. So how do you make money on that? On batteries and panels, I don't want to compete. I wish the Chinese would drop the price way down. Then all of the revenue would come from creating with very cheap high-quality products, systems that people can use and make it work right. Because the same guys that run those factories aren't going to answer their phone, come to your house, fix your problem, install it quickly. We -- In this industry, the main event is 5,000 AHJs, the last J stands for jurisdiction, all those little building departments that annoy everybody, 5,000 of them all the different rules, all knowing the right, all being slow, all being out to lunch a lot of the time, and that is what we have to do. And they're not going to take that job away from us. And if we do it efficiently, one, we'll be a great service to our customers; and 2, they can be profitable. No, I'm not making panels. No, I'm not making batteries -- Low-tech batteries. I'll make high-tech batteries here, way higher energy density.

Our next question surrounds tariffs and exposure to China. What impact might this have on SunPower's profitability and supply?

Well, what everybody is pointing out to our President, he's got a guy named [ Navarro ], telling him how we're going to build back the industry and factories will spring up from the ground. The guy is hallucinating. So what is the tariff? The tariff is simple, a tax. So if they charge me double, $0.60 a watt instead of $0.30 a watt, then our customers will start paying double. I'm not going to pay the tariff and have my company go bankrupt. So I'll pay the tariff as tax, pass that tax on to my customers. So I do care about it and the fact there's a larger feedback loop that if solar becomes too expensive again, then the whole market will go down and all the companies in the market will suffer. I'm hoping they will wake up by that time.

The next question is leaning into forward guidance. Can you share any thoughts on revenue growth, margins for the next couple of years and the impact of a potential recession?

You guys just saw 6 months of work, right? It's like the job is kind of like being a goalie and hockey, right? I stand there and catch the pucks before they get in the net. So can I have a long-term forecast? I can, but it's based on positioning more so than actually looking at what you project the P&L to be. Right now, we have a very lean workforce and it's going to get leaner, and it's American, okay? So one good thing about being an American, if you're selling to American houses, you got to be American. They're not going to import that. So when you have a company that's lean, and we now have a company that's lean, we've actually started, as you heard today, doing some hiring. You know you can survive in the market because, just like my stock graph, your stock will be green and the companies that aren't lean will be red. So that's the main event being -- having a stable company. Will the market go up? The one statistic I like comes from the EIA. It's a government organization that tracks it. And right now, close as I can estimate, the number of houses that have solar on them divided by the number of houses that could have solar on is 4%. So we have a toe in the water. This industry, we talk about being big, is a toe in the water. And what we've got to do is continue to hold cost and now we need to supply what they need and what they need is storage. They need storage more than they need solar. You make the cheapest electricity in the world from 9:00 a.m. to 3:00 p.m. Okay. Then what are you going to do in the other hours in the day? And that's where the problem is right now. Hence, storage division. And by the way, when storage becomes spread around the country, that's a big deal. That gets rid of the utilities as having a giant power plant that took 10 years to build and they go to the government and say, "I need more money because of blah, blah." All of a sudden, you're there with your own battery, and it's not that far to see when you flip the switch and say goodbye and your solar system and you make your house more efficient, too. You can't waste energy. But you can gather enough energy from your solar system and store it that will take care of your house. That vision is not that far away.

We only have a couple more. The next one is, how does stock price and valuation impact your willingness to use stock for acquisitions? And what is your view on the current valuation relative to that?

Right now, last time I checked our stock was $2. We have 80 million shares if you check the SEC website. So we're $160 million. So first is, if you're worth $160 million and you want to buy something that's worth $160 million, their proposition is, "Give me half your stock." Then you have to say, "Look, our stock is not going to be at $2." For the same reason that people invest in it going forward, you need to do that, too. Alternatively, "Okay, you've got your stock." "Oh, you don't have stock." Oh, you've got your stock and your stock is down. Okay? So what you're doing is swapping your stock for our stock and you're betting which one is going to go up faster. So there are arguments today. Obviously, what I love is the stock to be $20 and then you've got all the currency you want. But what I've discovered in the solar industry, I call it money poisoning that we had in the other industries. I always -- at Cypress I always had $500 million in the bank. I never thought about cash ever. I thought about beating the bad guys. And right now, for the first time in my life, I'm living in a cash flow dominated world. And I'll tell you, we run a tighter, leaner company because of that. So it's a dangerous world, but it's an accelerating world. The market is infinitely large. And if they don't help us to death in Washington, we'll be fine.

With plans to expand capacity, how are you ensuring workforce training aligns with quality benchmarks?

Workforce training is a big deal. We're not that good at it. But everything I showed you today, I showed you a couple of management systems, has a spec, has quality process associated with the spec and has training. So you can go in a room, somebody knows, tell you how it works. So my 19-year-old HR guy can run -- as good as reports ever got it at Cypress in a much bigger division. So yes, we're doing it. No, we're not a mature company yet. We are getting more mature every quarter. I didn't introduce him today. I will one of these times. We have an excellent quality guy, Surinder Bedi. And he is working on the quality of execution right now. Our products are pretty reliable. We don't have -- you saw 9 going to 2. So the disasters with your stuff not working are gone. So for us, quality means quality of execution. Do you have a spec? Do you do it right? Do you do it right the first time? What's your yield? So in our case, quality is almost synonymous with operational excellence.

Thank you. That is all the questions we have in the queue today. I'll turn it back to T.J. Rodgers for any closing remarks.

Well, I talked long as usual, but I thought this was cool stuff. I appreciate you coming in and listening to us. Thank you.