Maxeon Solar Technologies, Ltd.

Good day and thank you for your standby. Welcome to the Maxion Solar Technologies second quarter 2021 earnings conference call. At this time, all participants are in listen on the moon. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. As a reminder, this conference call is being recorded. I would now like to turn the call over to Robert Lane, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good day, everyone. Welcome to Maxion's second quarter 2021 earnings conference call. This is my first earnings call with Maxion, and I'm excited to be part of this exceptional team. With us today, our Chief Executive Officer, Jeff Waters, Chief Financial Officer, Kai Strobeck, and Chief Strategy Officer, Peter Aschenbrenner. 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. We will reference certain non-GAAP measures during today's call. Please refer to the appendix of our supplemental slide deck, as well as today's earnings press release, both of which are available on Maxion's investor relations website, for a presentation of the most directly comparable GAAP measure, as well as the relevant GAAP to non-GAAP reconciliations. I also want to remind everyone of a few changes that we started last quarter in the presentation of our numbers. First, we report and guide adjusted EBITDA, excluding the mark-to-market fair value remeasurement of our prepaid forward and physical delivery forward. Second, we report and guide non-GAAP gross profit and non-GAAP operating expenses by excluding stock-based compensation expenses and restructuring chargers. Finally, we want to point out that comparisons to the second 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 27, 2020. With that, let me turn the call over to Maxion's CEO, Jeff Waters.

Thank you, Rob, 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. Before we get to the results, I have some comments on employee health. Malaysia is currently experiencing a difficult wave of the COVID-19 pandemic, and proactive testing at our Malaysia facility has revealed an increasing number of positive cases. We have therefore temporarily paused production in line with government regulations while we deep clean the facilities and focus on our highest priority, the health and safety of our employees. All other Maxion facilities, including Mexico, France, and the Philippines, are undergoing proactive testing, and we're pleased to report there are no indications of material positivity rates. I continue to be proud of the work done by our teams globally as we defend against this global pandemic. Moving to second quarter results, the quarter was very productive operationally in our push to drive growth and solidify our balance sheet. Results were in line with guidance with revenue of $176 million and strong bookings that put us in a solid position for growth in the second half of the year. Our distributed generation business in Europe performed especially well, posting record revenue for the quarter while laying the foundation for our beyond the panel strategy. We're seeing strong growth in both our Maxion and Performance products, and we believe that we will continue to grow our share in 2021 in nearly every European market we serve, with especially significant share growth in Italy, France, and the Netherlands. European DG is important to us for many reasons, not the least of which is that it is among our most profitable markets. As supply chain costs normalize and we grow revenue beyond the panel, we believe that our European business will be a key driver of profitable growth. In addition to posting quarterly financial results consistent with our targets, the company also executed well on key operational initiatives. We posted strong, positive operating cash flows in the second quarter. Coupled with a successful equity raise in April, we are firming up our balance sheet. With respect to key margin drivers, we completed the phase out of our oldest cell technology, During the second quarter, we produced our last Maxion II solar cell and commenced installation of Maxion VI equipment. Our new technology will deliver significantly higher margins than Maxion II, and we are on schedule to ship our first panels later this year. This shift will also be coincident with logistic savings from the optimization of our factory network. where by the end of the year, we will be servicing Asian and European Maxion 3 and 6 customers from Malaysia rather than Mexico. The company is focused on our three strategic pillars for profitable growth that we believe will transform the company. Our execution on these three pillars will enable us to achieve our target business model within 2023 of at least 20% revenue growth, greater than 15% gross margin, and greater than 12% adjusted EBITDA In our panel innovation pillar, the highlights this quarter were the progress on our Maxion 7 cell development and the announcement of our disruptive new Maxion Air technology platform. We've been manufacturing the solar industry's highest efficiency, commercially available solar panels for over 15 years. That legacy is solidly intact today with Maxion 5 and 6, and we expect that Maxion 7 will extend our module performance lead. We took successful steps this quarter to demonstrate critical Maxion 7 performance milestones on the pilot line being built in our Fab Four. As both residential and commercial consumers get more educated on sustainability and the benefits their panels are creating both locally and for the planet, they are increasingly thinking about panel lifetime. Namely, how long will those panels sustain sufficient power output and how long will they reliably and safely work on their rooftops? In this area, no other commercially produced technologies come close to our product's performance. Both our Maxion and Performance series offer outstanding longevity. Panel performance is about more than efficiency, and you can expect to hear more on this later this year. We also announced our new Maxion Air technology, a super-thin, super-light panel that we believe will enable an annual market of around 4 gigawatts worth of commercial rooftops in Europe alone. We expect to begin shipping Maxi on Air in 2022. For our DG channel pillar, we're seeing strong growth broadly. As a reminder, we have a unique downstream sales approach where we have 1,200 and growing channel partners that represent our technology and brand and who have the ability to convey the value of our industry-best panels to their customers. These relationships built on trust that are developed over time and we're building on a decade-plus of investment. Our channel sits at the foundation of our Beyond the Panel strategy, as our partners are in a position to effectively communicate the value of new technologies like microinverters and storage. With the introduction of Performance Line AC products in July, we target exiting the year with about 20 percent of our non-USDG sales attributable to AC modules. Storage will be one of our next key areas of focus. In the focused utility scale pillar, as a reminder, our approach is to pursue markets where we have a unique value proposition. As a U.S. publicly listed company with global operations, a trusted reputation for our business practices, and a deep commitment to ESG, we're an especially attractive partner to many developers across the globe. This led to our announcement of 1.8 gigawatts of production expansion for the U.S. market. where our corporate culture and experience are especially important. In the near term, our early success in winning Primergy's one gigawatt Gemini power plant in Nevada has put us in a strong position to selectively fill out our remaining 2022 available capacity and to focus primarily on booking 2023 and beyond. Since our announcement in April regarding our P-series capacity expansion to supply the U.S. markets, we have seen sustained strong interest from utility scale developers, which has led us to accelerate our planning for a second phase of capacity. We're very encouraged by the recent U.S. legislative proposals with incentives that support domestic solar manufacturing. We believe that if enacted, they provide a great platform for Maxion to help the U.S. government achieve their goal to reestablish a domestic solar manufacturing value chain and to do so deploying cutting edge solar technology at critical scale. We recently submitted to the DOE's Loan Programs Office an application to support the deployment of a three gigawatt performance series solar cell module factory. We intend to move forward with this project pending successful negotiation of a DOE loan guarantee and the passage of enabling legislation including the Solar Energy Manufacturing for America Act and the America Jobs in Energy Manufacturing Act of 2021. The goal is to start solar panel production in the U.S. as early as 2023. Shifting outside of the U.S. in the rest of world utility scale business, supply chain costs are still elevated, but customer pricing expectations are getting more in line with these higher costs. Given that, we expect to begin converting our sales pipeline into book business in the near future. Combined with the continuing scale up of our bifacial P5 performance series capacity, we're increasingly confident in renewed shipment growth in our rest of world utility scale business as we enter 2022. As a reminder, our JV structure enabled Maxion to largely reallocate our volume to the Chinese market during the first half of 2021. We expect to provide an update regarding our utility scale backlog in Q4. Before I turn the call to Kai, A quick mention about our ESG effort. In June, we published our inaugural sustainability report, highlighting our initiatives, achievements, and plans related to the key ESG themes. Our commitment to responsible manufacturing and supply chain sourcing goes back to the inception of SunPower. Now as Maxion, we aim to establish our leadership in driving a holistic approach to sustainability in our industry. This report, aligns our ambitions and long-term goals with the United Nations Global Compact, the world's largest voluntary corporate sustainability initiative, which we joined in December of 2020. We believe we generate long-term value for our employees, customers, shareholders in the communities where we operate by holding ourselves to a higher standard in the way we conduct our business, as highlighted in the sustainability report. I will turn the call over to Kai to review our financial performance.