Earnings Call Excerpt
SunPower Corporation (SPWR)
Q4 FY07 Earnings Call
January 24, 2008, 01:30 PM ET
Executives
Thomas H. Werner - CEO
Emmanuel T. Hernandez - CFO
Howard Wenger - VP, Global Business Units
Peter Aschenbrenner - VP, Corporate Strategy
Julie Blunden - VP of Public Policy and Corporate Communications
Michael Armsby - VP of Finance
Analysts
Stephen O'Rourke - Deutsche Bank
Kelly Dougherty - Calyon Securities
Stuart Bush - RBC Capital Markets
Mark Bachman - Pacific Crest Securities
Paul Clegg - Jefferies & Co.
Robert Stone - Cowen And Company
Sanjay Shrestha - Lazard Capital Markets
Colin Rusch - Broadpoint Capital
Michael Molnar - Goldman Sachs
Christopher Blansett - JP Morgan
Pierre Maccagno - Needham & Company
Corey Tobin - William Blair & Company, L.L.C.
Al Kaschalk - Wedbush Morgan Securities Inc.
Michael Carboy - Signal Hill Group LLC
Vishal Shah - Lehman Brothers
Michael Horwitz - Pacific Growth Equities
Presentation
Operator
Good morning and welcome to SunPower Fourth Quarter 2007 Earnings Release Conference Call. Today's conference is being recorded, if you have any objections, you may disconnect at this time. Your lines have been placed on a listen-only mode until the question-and-answer segment of today's conference call. I would now like to turn the call over to Tom Werner, CEO of SunPower. Sir, you may begin.
Thomas H. Werner - Chief Executive Officer
Thank you for joining us today. We will report on our fourth quarter and full year 2007 financial results, providing some color on our strategies of investments and channel, technology and cost reduction initiatives. Then we will provide guidance for the first quarter and full year 2008.
Our fourth quarter performance once again exceeded our top and bottom line guidance. Q4 2007 revenue was $224 million, up 201% from our Q4 2006. Systems revenue accounted for 55% and components revenue accounted for 45%. In addition, Manny will describe in detail more on our financial results, including the EPS guidance, our updated raised guidance for 2008 and our outlook for 2009. Overall, 2007 was another exceptional year for SunPower. We more than tripled our top line revenue for the second consecutive year, while growing pro forma operating income 273%. This rate of profitable growth is a testament to the contribution of the SunPower team. So, I'd like to take this opportunity to thank them for their hard work over the past 12 months.
SunPower continues to execute on the key elements of our long-term strategies. Specifically, we will build a robust downstream channel and deliver brand preference. We will innovate technically to create unique high-value products and we will reduce cost across the value chain to compete with retail electric rates. Lastly, we will hire the best people in the industry. These strategies lead us confidence in our guidance to achieve our model of 30% gross margin, 10% operating expense, 20% operating margin no later than Q1 of 2009.
First was Morgan Stanley project finance facility. This is a $200 million facility, 95% funded by Morgan Stanley, 5% by SunPower. It has built-in standard terms and conditions. What this allows us to do is leverage a pre-arranged pool of financing, which we can apply new business to. We use this facility at our option and we can use other vehicles if they were better for our customers. Second was GE Financing of eight megawatt systems for five customers. These customers were HP, Toyota, Agilent, and two public agencies. This is different than Morgan Stanley
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