Maxeon Solar Technologies, Ltd.

Good day, ladies and gentlemen. Welcome to the Maxion Solar Technologies first quarter 2021 earnings call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to our host, Mr. Gary Dvorak of the Blue Shirt Group. Sir, you may begin.

Thank you, Operator. Good day, everyone, and welcome to Maxion's first quarter 2021 earnings conference call. With us today are Chief Executive Officer Jeff Waters, Chief Strategy Officer Peter Aschenbrenner, and Chief Financial Officer Kai Strobeck. Let me cover a few housekeeping items before I turn the call over to Jeff. As a reminder, a replay of this call will be available later today on the investor relations page of Maxion's 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, the 6K, and other SEC filings. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. To enhance this call, we have also posted a supplemental slide deck on the events and presentations page of Maxion's investor relations website. Finally, we want to point out that the comparisons to the first quarter of 2020 reflect a carve-out of Maxion's results while it was still part of SunPower last year. We began operating as an independent company on August 27th. With that, let me turn the call over to Maxion's CEO, Jeff Waters. Jeff?

Thank you, Gary, and good day, everyone. I'll start by giving a business overview and covering recent accomplishments. Kai will then review our financial performance and outlook, and we'll conclude with Q&A. On our last earnings call, I explained our three pillars of profitable growth. These are our leading panel technology, our unique focused approach to the utility scale business, and our strong global brand and BG channels. The entire company is focused on the execution of these pillars, and we're making exciting progress. First, on our leading panel technology. Two days ago, we unveiled Maxion Air. a novel ultra-thin, ultra-light, and flexible panel technology that eliminates glass and aluminum framing. This innovation is disruptive in many dimensions. At nearly half the weight of conventional panels, Maxion Air will enable solar deployment on low-load commercial rooftops that are not engineered to accept the weight of a conventional panel. We estimate this unserved market to be over 4 gigawatt just within Europe alone. Using a strong factory-applied polymer backing, These peel-and-stick panels are easy to install and are therefore expected to measurably reduce installation time and cost. You can learn more on the Maxion website. In addition to low-load commercial applications, we plan to extend Maxion Air to other markets such as residential rooftops and large-scale floating power plants in the future. We believe the competitive moat around Maxion Air is substantial. and that this form factor will not be easily replicated by our competitors because it's predicated on the unique capabilities of our proprietary IBC cell technology. In addition to superior efficiency, low power degradation, and leading reliability and durability, Maxion IBC solar cells also have the unique ability to share current and reverse bias while shaded, thus avoiding damaging or dangerously high temperatures. This feature is particularly important where panels are adhered directly to the rooftops. IBC cells also have superior corrosion resistance and the ability to bend without harmful cracking. This feature is particularly important to the Maxion Air platform with its lightweight and bendable non-glass super straight. Maxion's unique IBC technology is therefore a key enabler for this new product platform. Let me shift gears to another key pillar of our strategy, namely our large-scale business and specifically our U.S. market performance line initiatives. As you know, we announced this planned expansion in early April, and we have already made meaningful progress. Earlier today, we announced a definitive agreement to supply close to one gigawatt of performance line panels to PrimerG's Gemini project. Shipments will take place over a four-quarter period starting in the second quarter of 2022. We are pleased to have been chosen as the module supplier for the Gemini project, a gigawatt-scale solar plus storage project located in southern Nevada. We believe it will be one of the largest solar power systems in the U.S. when installed. This order covers a large fraction of the expected first-year output of our new in-house performance line capacity. In our opinion, this win confirms the value of Maxion's product offering in the U.S. market. Our primary focus in the U.S. is now on converting our substantial large-scale sales pipeline into additional bookings for delivery in 2023 and beyond. Moving to the final pillar, our global brand and DG channels. We saw continued progress in the first step of our beyond the panel strategy, namely our recently introduced AC modules. Maxion AC modules are currently available in Europe, the US and Australia. Demand is strong and we're not experiencing any significant microinverter shortages. Despite recent COVID lockdowns in several European countries, we continue to expect that AC modules will grow to over 20% of our DG sales outside of the U.S. as we exit 2021. The value of factory-integrated AC modules, combined with our knowledgeable channel partners, is compelling for customers. Given that, we're expanding our AC module portfolio to also include a performance line version. Initial shipments are planned for this summer. More broadly, on the back of our industry-leading panels, brand and channel, We saw record Q1 bookings for DG globally. I'd like to specifically highlight the European region where we saw record DG shipments for the first quarter, up 25% year on year and up 84% versus Q1 of 2019. We also saw continued strong growth from our marketing partner in the U.S., SunPower. While DG is strong, we still face challenges in our large-scale business outside of the U.S. Despite a large and growing pipeline outside of the U.S. and China, we're still proceeding cautiously in finalizing orders as we await better clarity on evolving industry supply chain costs. We expect increasing visibility as we move into the second half of the year. But for now, we're still releasing most of our near-term large-scale performance line allocation to our HSPV JV for sale in China. That said, our confidence remains high for Maxion's long-term prospects in large-scale. We're taking action to adjust the near-term realities of disruptive cost pressures in the industry supply chain. The shipments this year in our large-scale business are unlikely to match our expectations coming out of this spin last summer. However, with our global reputation as a trusted supplier and with our innovative technology, we're confident we'll achieve strong traction in global markets once the upstream supply chain normalizes. Cost reduction remains paramount, and we are redoubling our efforts to reduce costs and optimize our manufacturing footprint. As we phase out our legacy Maxion II technology, our European and Asian modcos supporting that line will be repurposed or otherwise rationalized. We believe our Malaysia cell factory loading will improve substantially as we ramp the U.S. performance line program. And we expect operating expenses to decline sequentially once we roll off the lingering SunPower separation expenses later this year. Kai will discuss our cost optimization efforts in more detail shortly. As we look into 2022 and beyond, we're very enthusiastic. As we execute over the next 12 months, at this time next year, we expect that we'll have robust growth of Maxion Air and Maxion 6, an increased percentage of sales driven by AC modules, and a pilot line in production for Maxeon 7. For large scale, the performance line will be shipping into the U.S., and upon supply chain normalization, our non-U.S. business will be able to track to the kind of demand growth we expected it to spend. As well, our factory footprint and operating costs will be further optimized, and positive operating leverage will have started taking hold. And last but not least, we will have the completion of our out-of-market polycontract in near sight. This vision of what Maxion can be just one year out is energizing for the Maxion team. Now I'll turn the call over to our new CFO, Kai Strobeck. You met Kai briefly on our last earnings call when he had just started. The transition is complete, and Kai is now running our finance function. We're excited to have a CFO of Kai's caliber with us and are impressed with his early contributions over the past few months. Kai, let me turn the call over to you.