Building employees set up SunPower tiles on houses in San Ramon, Calif.
Robert Nickelsberg | Getty Photographs
SunPower stated Tuesday it is restructuring its operations in a bid to focus solely on the fast-growing residential photo voltaic market. The corporate is buying residential photo voltaic supplier Blue Raven, whereas additionally trying to promote its industrial and industrial enterprise.
SunPower CEO Peter Faricy stated the acquisition was a pure match for a number of causes, together with that Blue Raven’s customer-first method aligns with SunPower’s motto. Moreover, greater than 90% of Blue Raven’s prospects are in 14 states that account for simply 5% of SunPower’s gross sales. In different phrases, the acquisition expands SunPower’s footprint in locations the place the corporate has struggled to grab market share.
“From a method standpoint, this transaction is an instance of one thing that permits us to serve shoppers a lot quicker than we’d have in any other case,” Faricy stated, including that the deal will probably be income and EBITDA constructive from day one.
SunPower will achieve greater than 20,000 prospects from Blue Raven, including to the 376,000 residential prospects it had on the finish of the second quarter.
The whole transaction worth of the acquisition is as much as $165 million, with the money required to shut the deal standing at as much as $145 million. SunPower used money from operations to fund the acquisition, with nearly all of the cash raised after the corporate bought 1 million shares of Enphase Energy.
Faricy stated that whereas the industrial and industrial photo voltaic phase is a horny area to function in with loads of development forward, the corporate’s determination to promote the division got here all the way down to capital allocation and the chance for a streamlined enterprise.
He famous the unit has garnered curiosity from potential patrons, however didn’t disclose any particular person names. Faricy additionally pointed to the attractiveness of the asset, saying that SunPower at present makes cash in industrial and industrial by means of managing contracts, whereas a future proprietor may benefit from each the managing and financing facet of the operation.
SunPower intends to make use of the cash from a possible sale to reinvest into its newly core residential enterprise, together with round buyer acquisition and expanded digital providers for householders.
“In our case, we’re completely satisfied to have the readability for traders on this singularly targeted technique now, specializing in residential shifting ahead,” Faricy stated.
A restructuring of this nature isn’t the primary for SunPower. In August 2020 the corporate spun out photovoltaic module maker Maxeon Solar, though the 2 separate entities nonetheless work collectively.
Shifting the corporate’s focus to particular person shoppers is maybe a pure match for Faricy, who took the helm of SunPower in April. He was beforehand CEO of world direct-to-consumer for Discovery Inc., and in addition served as vp of Amazon Market.
And whereas industrial and industrial photo voltaic provide different development avenues, nearly all of SunPower’s income comes from residential operations.
Full-year 2020 gross sales from residential and lightweight industrial totaled $848 million, whereas the industrial and industrial unit introduced in $254.8 million. The residential unit can be extra worthwhile. Gross margins per watt jumped from 19 cents in 2019 to 66 cents this yr, whereas margins from the industrial and industrial division declined from $0.25 to $0.06 throughout the identical interval.
“The info are the residential enterprise is bigger, it is quicker rising and it is extra worthwhile,” Faricy summarized. “[Residential] is the best place for us to deal with as we transfer ahead, and I feel we anticipate it to be effectively acquired by traders.”
Trying ahead, SunPower desires to be a one-stop store for shoppers. Relatively than having a one-time buyer relationship when the system is put in, the corporate is including power storage, electrical car capabilities and a bunch of digital merchandise together with power administration programs.
Residential photo voltaic installations have jumped in recent times. However on the finish of 2020, simply 2.7 million, or 3%, of houses throughout the U.S. sported rooftop panels. President Joe Biden’s local weather agenda requires photo voltaic’s portion of electrical energy era rising from 3% immediately to 40% by 2035. Photo voltaic installations might want to surge in coming years if these objectives are to be met.
However alternative would not at all times translate to returns for traders trying to capitalize on long-term traits. After a banner 2020, photo voltaic shares have suffered in 2021. Provide chain bottlenecks, rising uncooked materials prices and coverage uncertainty are among the many elements which have dented sentiment.
Faricy famous that SunPower has remained largely insulated from the chip scarcity, saying that the corporate has visibility by means of the tip of the calendar yr. That stated, he acknowledged the issue of securing elements, saying provide chains are a “lifelong problem.”
Shares of SunPower are up practically 6% during the last month, aided by an almost 10% achieve final Friday after S&P Dow Jones Indices introduced that SunPower can be added to the S&P MidCap 400 previous to the opening bell on Tuesday. The Invesco Solar ETF, by comparability, is down 10% during the last month.
SunPower shares superior 2% throughout premarket buying and selling on Tuesday.
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https://www.cnbc.com/2021/10/05/sunpower-announces-restructuring-aimed-at-doubling-down-on-residential-market.html | SunPower publicizes restructuring aimed toward doubling down on residential market