SunPower Inc.

Good day and thank you for standing by. Welcome to SunPower Corporation's fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker today, to Mr. Mike Weinstein, Vice President of Investor Relations at SunPower Corporation. Thank you, sir. You may begin.

Good afternoon. I would like to welcome everyone to our fourth quarter 2021 earnings conference call. On the call today, we will start with comments from Peter Ferrissey, CEO of SunPower, who will provide a summary of 2021's strategic plan accomplishments and discuss our forward-looking commitments for 2022 and beyond. Following Peter's comments, Monticell, SunPower's CFO, will then review our fourth quarter financial results, as well as provide an update to our guidance. 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 be making 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 2021 10-K, and our quarterly reports on Form 10-Q. Please see those 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 earnings press release for the appropriate GAAP to non-GAAP reconciliations. Finally, to enhance the call, we have posted a set of PowerPoint slides that we will reference during the call in the events and presentations page of the investor relations website. In the same location, we've also posted a supplemental data sheet detailing additional historical metrics. With that, I'd like to turn the call over to Peter Farisi, CEO of SunPower. Peter?

Thanks, Mike, and good afternoon, everyone. As you are aware, we reported our preliminary fourth quarter results last month, and today we are reporting in-line results. Before Manu shares the results details, I will review the strength of the underlying business, our five strategic pillars and progress in 2021, and plans for 2022 for each pillar. Please turn to slide number four. For the quarter, we continued to see strong top-of-funnel lead generation in our residential business, with nearly 22,500 new customer bookings in the quarter, a 42% increase over last year. This led to a record 17,000 customers added in the quarter, representing 31% year-over-year growth and our largest ever backlog. Our total customer install base stood at 427,000 at year end. We continued to sustain residential gross margins above 20% with 100 basis point increase versus last year at 25.6% for the quarter, a record high. Adjusted EBITDA per customer before product and digital investment was $2,200. Our new home segment continues to grow strongly with a record pipeline of 66,000 customers as we enter 2022, more than 40% higher than a year ago. Finally, SunVault bookings exited 2021 with a run rate over 130 million. As we disclosed in our preliminary announcement last month, we experienced some installation delays in the fourth quarter due to weather and on-the-cron. Similar to the rest of the industry and economy, we were impacted by some cost and availability pressure on our supply chain and labor pool. Despite these short-term challenges from the pandemic, we are very optimistic and excited about our future as we execute our strategic plan to become the world's most customer-centric home energy company. Please turn to slide number five. As you know, we are transforming SunPower into a residential solar company focused on providing a world-class customer experience that moves well beyond the initial system sale to a full ecosystem of integrated products and services to create a lifetime relationship with SunPower. I believe strategies are only as good as the quality of the leadership team behind them. So in 2021, I focused on building a talented and experienced leadership team to execute on the following five strategic pillars. Pillar number one is customer care. Customers are at the center of all of our discussions. After hiring Nuala Murphy last year as vice president of customer care, we have been rapidly improving our entire approach for customer service. Our guiding principle is that if a customer discovers a problem, That is a defect. We are proactively striving to identify any issues well before our customers do, and then we will exceed their expectations with a timely solution. Ultimately, I expect customer feedback to help guide our corporate and product development for ever-increasing levels of quality, which remains a major component of the SunPower brand. We also recently hired Derek Cusack as our Executive Vice President for Supply Chain Quality and Field Operations. In residential solar today, the process to install and activate new solar and battery systems is slow and bureaucratic. Our goal is to make the process of installing solar fast, easy, affordable, and enjoyable. Derek and his teams are focused on innovations to deliver world-class customer experience. Pillar two is growth. We are growing our market share with a world-class dealer network supported by the entire SunPower product, digital, and financial platform. We are complementing that network with a high-growth SunPower direct channel and a leading new homes business featuring new and expanded partnerships. In October, we welcome Ben Peterson and the Blue Raven team into the SunPower family. Blue Raven is off to a terrific start this year. I'm pleased to report the integration process is going very well, and we have already launched some power financial products at Blue Raven. We also recently hired June Savajay as our chief marketing officer. June comes to us from Brex and Spotify and will help guide the company's customer acquisition and brand strategy. Under June's leadership, our goal is to build a true direct-to-consumer brand with a much more cost-efficient customer acquisition process. Pillar three is best at affordable products. We are expanding our offerings to include not only our premium solar system SunPower has been known for, but also an array of quality and affordable products. We recognize the value of a lifetime customer relationship and we will nurture that by providing an entire ecosystem of fully designed and integrated products and services that are simple to use and money savings with clean and reliable energy at their core. As you know, we hired Nate Coleman as our chief products officer in November, and Nate has already accelerated this effort. Pillar four is digital innovation. Our vision is to make buying solar as easy as it is to buy a book on Amazon. To accelerate innovation of the customer experience, we recently hired Ellen Kinney as our vice president for digital products. Ellen will help push our digital innovation strategy to include major upgrades to the MySunPower app to provide a more efficient sales process, more control options for our customers, and increased ease of use to boost adoption. In addition, we are pleased to announce our most recent new hire, Kumar Brahma, EVP of Software Technology. Kumar is a world-class technology leader from Amazon who will build best-in-class solutions for our customers and dealers. Pillar five is world-class financial solutions. We recently hired Jason McRae with the objectives to drive higher sales rates, faster closings, and a broader customer base while contributing to our lifetime customer value. Please turn to slide number six. We have already made major strides towards the achievement of our strategic goals. First, we've made measurable progress towards improving customer care in 2021 with our commitment to proactively discover and correct issues before customers even notice whenever possible. Our handling of the recent connectors issue on the commercial equipment reflects this philosophy. Additionally, we've reduced customer issue resolution time by greater than 50%, and the number of customer interactions required to obtain resolution have improved by 1,300 basis points into the high double digits. Second, Blue Raven Solar expands our presence outside California and adds firepower to our direct channel, especially in states without a significant sunpower dealership network and no or low sunpower share. Our pipeline of potential new home installations continues to grow. We executed an exclusive agreement with Toll Brothers last year in California that provides a framework for further expansion nationally. We grew our market share in new homes and continue to work towards new partnerships. We announced our 25 by 25 initiative in 2021, which includes the goal of diversifying our residential customer base to include 25% from historically underrepresented communities by 2025. We're very proud of this commitment, which we will meet with new high-value product offerings at various price points, among other initiatives. We've already added new financial products for customers with expanded eligibility and low interest rates to help capture this important market segment. Third, on the product side, we restarted sales of our SunVault storage product last summer with rapidly growing bookings and healthy inventory. We also recently introduced our first residential virtual power plant offering under Connected Solutions. This is a program that enables our customers to receive payments from their interconnected utility in exchange for degrees of partial control over customer SunVault systems. We are also very pleased to announce our new partnership with OM Connect that we expect will expand our ability to bring financial value to customers quickly and meaningfully. Most importantly, these programs bring real, tangible benefits to utilities and their non-seller customers as well. They provide a source of highly distributed storage that can help offset the need for distribution upgrades as increasing numbers of electric vehicles and rooftop solar systems get interconnected. Fourth, as I mentioned, we have the right leadership team now in place to accelerate our digital efforts to enhance the My SunPower app as well as our design software to greatly support both our customers and our sales teams. Fifth, SunPower Financial was launched in December, which provides us a platform for off-balance sheet customer financing And we entered into a forward flow loan purchase agreement with an affiliate of Credit Suisse. Thanks to our strong leadership team and the dedicated mission-driven talent at SunPower, we got a lot done in 2021. And we have a lot more planned for this year. Please turn to slide seven. In 2022, we are leaning in and investing for growth. You can expect to see meaningful progress along several strategic lines, including, first, SunPower is making major investments to upgrade customer services. We believe that exceeding customer expectations for support is key to creating and maintaining our premium brand and growing lifetime customer relationships. You can expect more updates about this initiative at our Analyst Day. Second, continued rapid expansion of sales throughout the country, especially outside California as we invest in our dealer network and expand our team at SunPower Direct. Third, we plan to introduce new high-value, high-performance panel and storage options that will have strong appeal beyond the premium residential segment that we currently capture. As we explore our options in the coming weeks and months, we look forward to providing you with a more detailed update at our analyst day. Fourth, we are making a digital product investment to improve our customer experience and our operation efficiency. And finally, at SunPower Financial, we are reiterating our plan to increase the origination of residential financing from 35% in 2021 to 45% in 2022. This helps our customers qualify for financing quicker while helping our dealers and direct salespeople close sales faster. It also brings new fee income that we've never previously captured. When you add all this up, SunPower is on a path to change the world for millions of solar customers. We are passionate about our mission, and we are just getting started. The seeds that we are planting now will bear fruit for years to come as we build the world's most customer-centric home energy company. Before I turn the call over to Manu, I'd like to address our new module supply agreement. The new contract terms allow us to continue offering our existing residential products while exploring additional panel providers immediately. Most importantly, the new deal will ensure we can serve customers and dealers given the strong demand for residential solar. I'll close my comments by reemphasizing how pleased I am with the strength of customer demand. From my perspective, consumer demand is the single most important metric of our health. Now our focus is on serving and delighting our customers. We plan on having an analyst day on March 31st in San Diego. I look forward to seeing you there and introducing you to our leadership team. With that, I'd like to turn the call over to Manu Seale, CFO of SunPower. Manu. Thanks, Peter.