Maxeon (MAXN) Provides Business Update; Reports Q3 Revenue and Shipment Results

Maxeon Solar Technologies, Ltd. (NASDAQ: MAXN) today provided a business update following the end of the third quarter, during which the Company's performance was impacted by reduced shipments to its largest distributed generation (DG) customer located in the United States and an industry-wide demand slowdown in the global DG markets.

Maxeon's CEO Bill Mulligan commented, "as disclosed in our last earnings call, our largest US DG customer breached their payment obligations under our current Master Supply Agreement (MSA) and we paused shipments in late July as a result. While this customer has recently made several payments on their outstanding balance and is now close to becoming current, we continue to pause our shipments and engage in good faith towards resolution of certain ongoing claims of breach under the MSA. We do not have visibility into how quickly such resolution can be achieved. It is our position that we have firm quantity and pricing contracts in place."

The Company currently expects third quarter 2023 revenues to be in the range of $224 to $229 million, and shipments to be in the range of 622 to 632 megawatts. As a result, the range of our Adjusted EBITDA guidance we provided for the third quarter is expected to shift downward by approximately $30 million, due to the factors mentioned above as well as certain inventory adjustments.

"In light of the current market environment, Maxeon is taking decisive action to re-engineer its IBC manufacturing capacity and strengthen the fundamentals of our DG business while maintaining full pace and unchanged direction in our U.S. large scale business," Mulligan continued. "Instead of refurbishing our Fab 5 facility in the Philippines, which we now plan to utilize for the scale-up of our next-generation Maxeon 8 technology, we will convert our legacy Maxeon 3 capacity in the Philippines to Maxeon 7 technology. This will allow us to accelerate market introduction of world-record efficiency Maxeon 7 panels by several months and reduce capital expenditures by about $100 million."

Through the acquisition of Solaria's sales channel assets, the Company intends to not only accelerate its IBC product sales through its own Maxeon-branded in the US, but also to enable introduction of a "value" offering, complementary to our premium IBC product. This is the same two-tiered product strategy the Company successfully employs in Europe today.

Maxeon also plans to use this opportunity to begin the preparation of its Fab 3 facility in Malaysia to install a TOPCon solar cell pilot line ahead of the start-up of our planned manufacturing facility in Albuquerque. This pilot line will de-risk our planned US factory ramp.

Maxeon's Albuquerque solar cell and module factory remains on track. Engineering and pre-construction work are in progress and environmental surveys have been completed. Customer negotiations and due diligence on our DOE loan application are proceeding as planned.

Restructuring actions are expected to result in a reduction of approximately 15% of the Company's global workforce, with most of the reductions expected to occur by the end of the year.

"As a result of rapidly changing market and industry conditions, we have acted decisively to streamline our operations, invest in new technology, and adjust our mix between the DG and utility-scale markets. We believe that Maxeon is well positioned to weather this market disruption and come out stronger on the other side," said Mulligan.

"Maxeon's strategy is to deliver premium, differentiated products and a superior customer experience across a balanced global portfolio of DG and utility scale markets. The current industry disruption provides an opportunity to re-engineer and rebalance our technology portfolio. I'm confident that this is the right strategy for Maxeon, and that our highly experienced teams, industry-leading technology, and strong track record and presence in attractive high-growth markets provide us with the tools to successfully execute this strategy."

The Company will provide further detail on its third quarter 2023 results and fourth quarter 2023 guidance, as well as on the impacts of the above-mentioned restructuring activities, during its third quarter 2023 earnings call, which is currently scheduled for November 15, 2023.

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